1951-12-15

Mr. George A. Drew (Leader of the Opposition):: Mr. Speaker, on a question of privilege I would recall the fact that, on two previous occasions, I have directed questions to the Prime Minister (Mr. St. Laurent) in regard to any obligations that may have been established under NATO, and on a still earlier occasion I called the attention of the house to press reports from Europe in which the Minister of National Defence (Mr. Claxton) had made certain statements as to plans that had been settled in regard to construction that was to take place in Europe. I pointed out at that time that this raised the question of long-term policy which had not been placed before, let alone been settled by, the house in any way. In response to the questions I have asked, the house was informed by the Prime Minister as recently as the day before yesterday that these undertakings have not been settled.
This morning, over the Canadian Broadcasting Corporation news reports and also in today's press I have heard and seen the reports of the building that is to take place to house the 27th brigade in Germany. The report to which I refer is not put forward as a speculative report in any way but is a positive statement that the camps that will be built for the Canadians in the Soest area in Germany are expected to surpass even the excellent barracks the 27th brigade now has in the Hanover area, 100 miles to the northeast.
In the radio broadcast I heard the expression that our men would be living "the life of Riley" as they would be the finest barracks that had been built. Then the report went on to say as follows, and I am now quoting from the Canadian Press dispatch which reports this as information coming from Soest in Germany:
The new camps are expected to scatter the brigade over a fairly large area just as its units are now scattered over a fifty-mile area around Hanover. For reasons of economy the scattering may be modified but tentative plans are for seven
self-contained camps made up of hundreds of one-storey buildings of concrete, cement and stucco which will be built by Germans under Canadian direction.
It will be recalled that at the time the earlier press reports referred to this subject it was stated that buildings of this kind were going to be built by Germans at a cost of several million dollars, although the exact number of millions was not determined. I pointed out at that time that this could not be regarded simply as a statement affecting the construction of accommodation for the 27th brigade alone, but that it did establish a policy which would of necessity be related to possible commitments on a much more extended scale, and that a matter of this kind is something certainly which should be placed before the members of this house, particularly when they are in session. In any event, there is another question that arises, and that is, how buildings of this kind are to be determined. The statement appearing today in the press, and being given wide coverage by the Canadian Broadcasting Corporation, makes positive and very definite statements as to the way this is to be done, and particularly that it is to be done by German workmen under Canadian direction, and in relation to plans that have been settled on, on a very extensive scale.
I raise this question of privilege, Mr. Speaker, because I do believe that if this has been settled, particularly after the information we received before that there perhaps was some misunderstanding of the statement made by the Minister of National Defence (Mr. Claxton), we should know two things: First of all, is this part of some arrangement under NATO, and, if so, what arrangements have been made with NATO? Second, what exactly are the arrangements under which Canada is going to employ German workmen to erect these buildings, and is this just some indication of a broader policy which may relate to any other forces being sent overseas?


Mr. Knowles:: On a point of order, Mr. Speaker, before the Prime Minister replies I wonder if I might say just a word. I hope that the leader of the opposition will not take offence at this. Likewise, I hope that the Minister of Fisheries (Mr. Mayhew) will not take offence if I indicate that this is similar to the situation that we had yesterday. I hope that when we come back here for the next session we will have the matter clarified as to the rights of the leader of the opposition

North Atlantic Treaty
and ministers to make statements, called privilege or what have you, as compared with the rights that apply to ordinary members. It seems to me that far too often questions are asked on privilege-


Some hon. Members:: Hear, hear.


Stanley Howard Knowles: Government members are applauding. But I may tell them that mistakes are made on the government side, too. Far too often ministers on the government side bring up matters that should be dealt with on the orders of the day, but raise them on questions of privilege. Far too often statements which ministens make on the orders of *the day or on motions should be made in debate. As Your Honour knows, this is a matter that was the subject of some discussion in Your Honour's committee on procedure.


Mr. Graydon:: It does not appear in the report.


Stanley Howard Knowles: But it was discussed in committee, and the hon. member for Peel knows it. I am surprised that the hon. member for Peel, who objected to the Minister of Fisheries making a provocative statement on motions yesterday, did not object to his own leader making his statement at this time today. I say, quite frankly, Mr. Speaker, I am not casting a reflection solely on the leader of the opposition. This is something that is done from the front benches on both sides of the house. It would be unfair not to permit the government a reply this morning, and I do not object to a reply being made, but I do hope that at the next session Your Honour will watch this matter in the way in which the house would like to have it watched.


George Alexander Drew: Since the hon. member who has just spoken has-well, I really think, substituted himself for Your Honour on this occasion-


Gordon Graydon: Again.


George Alexander Drew: -I do feel that I should make some comment in relation to the suggestion he has made that there is some impropriety in the proceeding that has been adopted. I would point out that the procedure I have adopted is in no way incorrect, and it is not similar to the procedure which was discussed yesterday. The procedure which was discussed yesterday was one relating to a particular statement within the house. I am referring to the privileges of the members of this house. I am referring to a fundamental privilege, and that is whether statements of policy and announcements of decisions by the government should be made in the first place before parliament knows anything about them, and in the second place are to be made without informing parliament when parliament is sitting.

As to the question of privilege, I submit, Mr. Speaker, this is the proper place, and I am seeking no special concessions as leader of the opposition. I am simply raising a question in regard to the rights of the members of this house, and may I say to those who applauded the suggestion that such questions should not be raised, that I would hope hon. members here would seek wider opportunities for parliament to exercise its authority rather than seeking to diminish it, as some of them would appear to wish.


Mr. Speaker:: Probably it is just as well that the hon. member for Winnipeg North Centre has brought this matter to my attention. However, hon. members will recall that during the present session no opportunity has been given to hon. members to raise grievances. We have not gone into committee of supply or committee of ways and means, and for that reason I have allowed considerable latitude both when motions are called and also on the orders of the day. I am sure it would please very few members if I endeavoured to carry out the rules of the house strictly when hon. members have not an opportunity to raise grievances.
The hon. member referred to an incident which took place yesterday. At that time, when the Minister of Fisheries was making a statement, the hon. member for Peel rose and objected to the statement being made. I think he was quite within his rights in so rising. I, in my very limited wisdom, thought that the statement was almost completed, and it might be just as well if it was completed, but I did point out afterwards that I was giving an opportunity to the hon. member for St. John's West (Mr. Browne) to make a reply.
I agree very largely with what the hon. member for Peel said, and I stated yesterday that statements from government benches should not be provocative or argumentative; they should be factual statements only. However, we are getting near the end of the session. I do not intend to be any more strict throughout the remaining days of this session than I have been, but I hope that next session we shall be able to carry on the proceedings of the house more in accordance with the rules, but in a manner which will enable me to interpret the rules so that every hon. member will have an opportunity to express his views.


Mr. Pouliot:: Mr. Speaker, if I may be permitted, I was not surprised, but I had some regret, when I heard you mention your limited wisdom. In fact your wisdom is equal to your humility.


Mr. Speaker:: Thank you indeed. Perhaps we can now have an answer to the question which was raised by the leader of the opposition.


Right Hon. L. S. St. Laurent (Prime Minister):: Mr. Speaker, I have listened to what the leader of the opposition has said. I did not listen to the radio this morning and I did not see the dispatch to which he has referred; but I can assure him and the house that though we all knew when the brigade was going to Europe that it would have to be housed, the question as to how that was going to be done has not been discussed by the government so far, and there is no justification whatsoever for this report to which the leader of the opposition has referred.
Whenever the government does come to a conclusion with respect to this matter it will be announced here, and the house will be asked in the usual way to make provision for carrying out the recommendation the government may have to make. No policy has been decided upon by the government in that respect, and this matter as to whether and where and how new barracks may have to be built has not yet been determined. The barracks that are at present occupied are barracks which had been allotted to the United Kingdom forces, and that have been placed provisionally at the disposal of the Canadian brigade.
Now, what will ultimately be done about it has not yet been determined, and there is nothing so far that the government could announce in that respect. I am sorry it frequently happens there are assertions made over the radio and in the press that are not founded upon information properly obtained. I do not know where they get this. It may be summarizing rumours which are being talked about in public. But this matter has not come before the government. There has been no decision made about it; and when there is, it will be communicated to parliament as it should be.


George Alexander Drew: I welcome the assurance by the Prime Minister because, as I explained, this was given in such factual detail that it raised the question as to whether some decision had been reached. But I would offer a suggestion in relation to the matter, which the Prime Minister has very clearly indicated is important, that if the practice of making anonymous statements by officials of the Department of National Defence were discontinued, some of this confusion might be avoided.


Hon. Brooke Claxton (Minister of National Defence):: I must rise to answer that. I have in the Department of National Defence and in the three armed forces in Canada, the
North Atlantic Treaty
navy, the army and .the air force, as good a group of public servants, devoted to the cause of Canada, as there ever has been serving this country.
There is no practice of making anonymous statements. Everyone knows that every statement issued by the Department of National Defence is issued over my name, if it contains a statement of policy; and otherwise they are issued as statements by National Defence headquarters or by the service concerned. There are no other statements. The suggestion the leader of the opposition (Mr. Drew) makes in this connection is just as far afield as anything could be.
How can we be responsible for a newspaper report which apparently emanated from Germany and which, so far as one can see, is based upon speculation-because the location of the proposed camp in Germany has not been finally decided upon. There is no decision as to the type of construction. There is no decision as to the arrangements under which the land would be made available. There is no decision as to the manner in which the costs would be met. AH these are matters which have to be worked out-
Everyone knows, as the Prime Minister has said, that our troops have to be housed. They have to winter over there. They cannot live out in this weather. But the arrangements under which this is to be done have still to be decided upon, both with regard to the three occupying powers, the German government and the NATO organization.



RADIO BROADCASTING


[Stage Direction]
Mr. W. A. Robinson (Simcoe East) presented the third and final report of the special committee on radio broadcasting.
Mr. E. D. Fulton (Kamloops):: Mr. Speaker, may I ask the hon. member for Simcoe East, who has just tabled the report of the radio committee, if he will make it clear that this report was not concurred in by members of the opposition on the committee, and that it is a majority report only.


Mr. Robinson:: It speaks for itself.



REPORTS AND PAPERS

[Stage Direction]
Annual report of the Department of Citizenship and Immigration, in English and in French.-Mr. Harris (Grey-Bruce).
1986	HOUSE OF
Inquiries of the Ministry UNITED NATIONS

[Stage Direction]
On the orders of the day:
Mr. M. J. Coldwell (Roseiown-Biggar):: Mr. Speaker, I should like to ask a question. It is, I believe, quite in conformity with your suggestion made a short time ago. A report appears in this morning's paper to the effect that Canada has joined with others in voting against a proposal before the United Nations to set up a special fund to assist underdeveloped countries. Many of us are very anxious to see more help being given to the underdeveloped countries, particularly in Asia, as a means of preventing the further spread of totalitarianism in that area.
Many of us too are supporting the rearmament program of NATO because we hope that some proportionate amount will be appropriated for the raising of the standard of living of underdeveloped areas, as a means of advancing human progress. Would the Secretary of State for External Affairs give the house any information as to why Canada opposed this particular suggestion?


Hon. L. B. Pearson (Secretary of State for External Affairs):: Mr. Speaker, as I have not' yet received a report on this matter from our delegation in Paris, it may be necessary for me at some later date to amplify what I am about to say. However, I do know that this proposal, and the action taken by our delegation in respect to it, does not mean that the delegation or, indeed, the government is unsympathetic to the question of technical assistance for underdeveloped countries.
We have already expressed that sympathy, both in deed and in word, at this assembly. This particular proposal, which was put before a committee of the assembly, was for the establishment of a fund of $500 million by the United Nations which could be made available, under the procedure outlined in the resolution, for the assistance of underdeveloped countries.
The general attitude we have taken in this matter at the United Nations is that there is sufficient machinery for this purpose now, if members of the United Nations wish to use that machinery, and that it is unnecessary and therefore undesirable at this time to set up a special organization with a stated amount to be made available to it; especially as during the discussion of the matter the United States, which would normally contribute the greatest proportion of the resources which would be made available,


indicated that it was opposed to the resolution, and opposed to the procedure, and would not be able to contribute to this fund.
In the circumstances-and I think these are the circumstances; but I will have to confirm this when we receive the report from Paris- we decided to oppose the resolution. At the same time we were in favour of an alternative resolution which would have once again pledged our support for the principle of assistance to underdeveloped countries. However, we were not in favour of implementing that support by the particular method indicated in the resolution to which the hon. member has referred.



CRIMINAL CODE


[Stage Direction]
On the orders of the day:
Mr. J. G. Diefenbaker (Lake Centre):: Mr. Speaker, I should like to ask a question of the Minister of Justice, of which notice has been given. In order to assure the maintenance of freedom of the press and of radio, would the Department of Justice give consideration to amending the Criminal Code in connection with convictions for contempt of court, as against press or radio, so that in cases such as that in which the Globe and Mail was recently assessed the costs of the court for alleged contempt, by Mr. Justice Wells, a right of appeal will be provided.
Also, will an amendment be considered to remove the anomaly which would appear to make the law respecting contempt of court too strict, in that it denies press comment on a case after trial, until every accused has exhausted his rights of appeal.


Hon. Stuart S. Garson (Minister of Justice):: I should like to reply to both my hon. friend's questions at the same time. We in the Department of Justice have been following with some interest the news stories and editorial comment concerning the action by Mr. Justice Wells of the Supreme Court of Ontario, high court division, who held the Globe and Mail in contempt. In that connection we have been giving consideration to the rather important issues which are involved in this course of action. The department has not yet reached any decision upon which government policy could be based that the present law should be changed. If there are any developments in government policy in this regard they will be announced in due course.

Canadian National Railways INQUIRY FOR RETURN	Mr. Speaker: Is it the pleasure of the house



GOVERNMENT EMPLOYEES


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: In the absence of the Secretary of State (Mr. Bradley) I should like to direct a question to the appropriate minister. This relates to questions of mine which were passed as an order for return on November 28, reported on page 236 of Votes and Proceedings. My questions had to do with the five-day week for civil service and government employees. I wonder if I may expect this return before the end of the session.


Louis Stephen St-Laurent: I shall have the matter looked into.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
George Alexander Drew: On Thursday last I directed a question to the Minister of National Defence in regard to very detailed articles which had appeared in regard to our radar screen and, in view of the positive statements which had been made as to the deficiencies of that screen, asked him to explain. At the time the minister stated he had not seen the articles, and I should like to ask him now if he is in position to make a statement.


Brooke Claxton: I realize that the leader of the opposition was not in the house yesterday when I made a statement in that regard.



NATIONAL GALLERY


Hon. W. E. Harris (Minister of Citizenship and Immigration) moved: the third reading of Bill No. 42, respecting the National Gallery of Canada.
Motion agreed to and bill read the third time and passed.



CIVIL SERVICE ACT


Hon. Alphonse Fournier (for the Secretary of Stale) moved: the third reading of Bill No. 43, to amend the Civil Service Act.
to adopt the motion?


Stanley Howard Knowles: On division.
Motion agreed to on division and bill read the third time and passed.



CANADIAN NATIONAL RAILWAYS


Alphonse Fournier: the second reading of Bill No. 45, to authorize the provision of moneys to meet certain commitments for new equipment incurred by the Canadian National Railways system during the calendar year 1951, and to authorize the guarantee by His Majesty of certain securities to be issued by the Canadian National Railways.


Mr. Macdonnell (Greenwood):: May we have an explanation?


Mr. W. M. Benidickson (Parliamentary Assistant to the Minister of Transport):: Mr. Speaker, while this bill stands in the name of the Minister of Finance (Mr. Abbott) it concerns the financing of Canadian National Railways, so perhaps I could give the explanation. The short title is Canadian National Railways Financing and Guarantee Act (No. 2), 1951. Hon. members may ask why there is a second act of this type this year.
The house will recall that the annual Canadian National Railways financing bill passed at the first session of this year contained an unusual clause which permitted the Canadian National Railways, subject to the approval of the governor in council, to make commitments in 1951 for the purchase of equipment which it was not expected would be delivered in 1951, but in 1952 or perhaps later. Orders could not be placed without government authority. On June 19, 1951, I placed on Hansard a list of the equipment for which commitments were to be authorized; the total amount of the commitments was not to exceed $111,512,920.
The house will realize that normally this financing and guarantee act comes to it in May or June of the usual session. We are now informed that some of this equipment will be delivered sooner than expected and prior to June 30 next year. The present bill simply provides that the usual guarantees can be given for the financing of this equipment to the extent of $55,581,816, which it is expected is the value of the equipment that
1988

Canadian National Railways will be delivered under these authorized orders before the house has before it next year the usual Canadian National Railways financing and guarantee bill. With the permission of the house I could place on Hansard a list of the rolling stock that it is expected
will be delivered prior to the time the hcfuse would ordinarily deal with it next year.


Mr. Speaker:: Has the hon. member permission?


Some hon. Members:: Agreed.


William Moore Benidickson: The table follows:
Description	Amount
12 (800 H.P.) Diesel electric switchers	 $ 1,393,920.00
12 (660 H.P.) Diesel electric switchers	 1,203,840.00
1 Diesel electric switching locomotive	 101,201.00
24 (1500-1600 H.P.) Road diesels	 4,800,000.00
20 Diesel switchers Canadian)	 3,120,000.00
5 Diesel switchers (U.S.)	|
1000	(40-ton)	Automobile cars	
7,700,000.001500	(70-ton)	Drop end gondola cars	
10,601,250.00750	(70-ton)	Gondola cars	
5,280,000.00300	( 70-ton)	Gondola cars (G.T.W.R.R.)	
1,955,400.00500	( 70-ton)	Triple hopper cars	
3,465,000.00750	(70-ton)	Triple hopper cars	
5,176,875.00125	(70-ton)	Covered hopper cars (G.T.W.R.R.)	
881,250.00500	(50-ton)	Box cars (part order)	
3,374,250.00130	(50-ton)	Box cars (part order)	
877,305.0050	(30-ton)	Box cars (Nfld.)	
278,575.00300	(50-ton)	Steel underframe flat cars	
1,996,500.00500	(50-ton)	Flat cars	
3,308,250.0010	(30-ton)	Steel frame stock cars	
68,200.00


James MacKerras Macdonnell: As the
parliamentary assistant has stated, this bill is pursuant to action taken last June, which action was an innovation. I think any questions that I have to ask could better be asked when we are in committee.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Dion in the chair.
On section 1

Short title.
James MacKerras Macdonnell: Mr. Chairman, as the parliamentary assistant has pointed out, authority was given last June by chapter 45 to the governor in council to incur commitments totalling $111 million. The explanation given then was that by reason of an anticipated shortage of steel and so on it was desirable to get that authority, which I believe was unprecedented. The judgment of the house was obtained and the authority was given to make commitments covering the equipment set out in the table to be found on page 4297 of Hansard of June 19.
The government is now coming to parliament and saying that with regard to part of that sum of $111 million, to wit, $55 million odd, they now wish to carry the transaction a step forward and be allowed to issue securities to provide for the purchase of equipment totalling this lesser amount. I should like to ask whether all the equipment

in the amount now presently being provided for was included in the list of June last.


William Moore Benidickson: Yes.


James MacKerras Macdonnell: We granted the authority to make these commitments and naturally we must grant authority to pay. How soon are these deliveries to begin? How is this amount arrived at? As these commitments have been made, there is no sense holding back and not giving authority. On the other hand we ought to be given a prima facie case for the need of authorizing this very large amount at this time.


William Moore Benidickson: On page 4296 of Hansard for the last session I gave in some detail the reasons for the apprehensions of the railroad about future deliveries having regard to the short supply position of many of the items that they anticipated they would want in 1952. The detail of equipment that the house gave me permission to table without reading is in every particular to be found also in the list that I provided last session to which the hon. member for Greenwood has referred, and which appears at page 4297. It has turned out that the actual expected delivery date of this equipment is somewhat better than the management of the road believed was possible last spring when they thought that orders should be placed with manufacturers.
My hon. friend asks how we arrive at the figure of $55 million that we are now asking authority to finance. This is based upon the

report of the C.N.R. management after consultation with their suppliers. There is now advice that the various items appearing on the list tabled will be delivered in sequence between now and June 30. The same items of course will also appear in the 1952 equipment budget of the Canadian National Railways. The additional equipment that the house authorized the C.N.R. last June to order will also appear in the 1952 C.N.R. budget and will come up for discussion before the committee on railways and shipping. We have information now that before June 30 next these various items, appearing on the list which I have provided for Hansard, can be delivered and thus must be paid for.


James MacKerras Macdonnell: I presume that the issue of these securities will be timed so that we will not be issuing $55 million in securities and paying interest on the amount in advance of requirement. You are taking the power to get intermediate loans so that you will not have to issue them until the convenient and proper time.


William Moore Benidickson: That is correct. In the initial stages at least it is financed by temporary loans to the Canadian National Railways from the government, so the equipment can be paid for as delivered.


[Stage Direction]
Section agreed to.
Sections 2 to 8 inclusive agreed to.
Title agreed to.
Bill reported.
Mr. Speaker:: When shall the said bill be read the third time? Now?


Stanley Howard Knowles: By leave.
Mr. Fournier, Hull (for Mr. Abbott) moved the third reading of the bill.
Bill read the third time and passed.



FINANCIAL ADMINISTRATION


[Stage Direction]
The house in committee on Bill No. 25, to provide for the financial administration of the government of Canada, the audit of the public accounts and the financial control of crown corporations-Mr. Abbott-Mr. Dion in the chair.
On section 1-Short title.
James MacKerras Macdonnell: I should like to make a few brief comments on clause
1.	I think any other comments can await the relevant sections. This bill has been before the public accounts committee, and in general I approve of it. It is a measure 94699-127J
Financial Administration which represents a great deal of efficient work on the part of the staff of the Department of Finance. In large measure it puts into statutory form practices which have grown up that have been found to be convenient and which have had to derive their sanction from various acts and no doubt from various other authorities as well. They are now brought together and put into this bill which I think the committee felt had a great deal of merit in it.


Stanley Howard Knowles: Would the parliamentary assistant tell us at this point which sections of the bill were amended by the committee?


Mr. Sinclair:: On the whole the amendments were fairly minor ones as to phrasing. The only place where the change in phrasing is substantial is in section 76 having to do with crown companies. As the sections are dealt with perhaps I might be allowed to indicate those where amendments were made. Members who were on the committee will recall there was no major change in any of the clauses. In certain cases a word was changed or a word was added. For example a change was made to "the Auditor General shall report forthwith" instead of "the Auditor General shall report". The only main change in phrasing is in section 76 having to do with crown corporations.


[Stage Direction]
Section agreed to.
Sections 2 to 4 inclusive agreed to.
On section 5-Duties of treasury board.
James MacKerras Macdonnell: I want to say a word about section 5. This clause is in the part of the bill entitled "treasury board" and refers to finance and the making of estimates. I am not going to go over the ground again complaining about the inaccuracy of estimating, but I wish to refer to one thing which I think is relevant and which I regard as a matter of very great importance. Last April the Minister of Finance used very strong language indeed in speaking about the necessity of government economy as a matter of defence against inflation. I want to read a sentence or two from what he said because it was so strong, and I wish to record regret that he seems to have wholly departed from it. At page 1801 of Hansard for April 10 he said:
Immediately following the Korean crisis last summer the government reviewed its own expenditure programs, and many projects that had been planned and for which parliament had voted funds were deferred. Since that time the numbers in many units in the public service have been reduced or held below the figures for which parliament had appropriated salaries. Hon. members and others have already seen tangible effects of this policy. The detail pages of the estimates show many instances where expenditure in the past year has

Financial Administration been considerably below what was authorized and planned, despite the increase in wages, salaries, and prices. For this new fiscal year we have applied a similar but more severe test oi need. For nondefence purposes we have reversed the upward trend in expenditures. The estimates placed before parliament for this year show a reduction of $35 million below last year, despite an increase of more than 10 per cent in salary and wage levels, despite higher materials and construction costs, and despite an increase of nearly $40 million in old age pensions, family allowances, tax rental agreements with provinces, and similar payments that rise automatically with increases in population and the value of production.
He goes on to speak about the reduction pf employees, etc.
There was a great deal of dispute about the figure of $35 million, but I shall not labour the point. I shall merely read some remarks which I have put on record before.
They are from the Winnipeg Free Press. It speaks about the $35 million hoped-for reduction out of an estimate of $2,036 million for non-defence expenditures. The Free Press comment is as follows:
But the government's achievement here was only $35 million out of $2,036 million, virtually total failure.
Later it says:
. . . no government can continue to throw oil on the fire with one hand and keep down the flames with the other.
This committee will recall that some weeks ago we were given a figure, I think it covered the first seven months of the fiscal year, which showed that expenditures instead of being down $35 million were up $37 million. I asked a question of the parliamentary assistant, and he gave what I thought was rather a debating point answer, and in my opinion an answer that had nothing to do with the realities of the situation. But I comforted myself with the thought that when the minister came back there would be a more serious method of dealing with this matter. I thought that perhaps when the cat was away the mice would play. Actually, we have been thrown out of the frying pan into the fire.
The other day the minister spoke of this in a very offhand fashion, and said it was up only 3 per cent or 4 per cent, which is about right. My real concern, Mr. Chairman, which I want to record is that I believe, and I think the minister believed when he spoke last April, that this is one of the serious Means of fighting this great plague which threatens us. I regret very much indeed that, so far as I can see, the minister has now thrown up the sponge, and in effect said that there is nothing that we can do about it, and that it is not too bad anyway. This has

disturbed me a great deal, and in that connection I want to make one comment.
I have ventured in this house before, recognizing the difficulty of economy, to say that I thought the only way to make economies was for the minister to ration, as it were, the various departments. I am not going to labour that, but I am putting on the record and I regard it as a matter of real importance and great seriousness that apparently we have not only abandoned the pursuit of economy but that the minister takes it with apparent equanimity. I should like to refer in this connection to the fact that there are men in public life who have gone to the mat on this question of cutting expenditures. I have in my hand a copy of a speech delivered on June 12 last by the Hon. Angus L. Macdonald. I should point out that Mr. Macdonald was in a different position from our own finance minister because he was facing a deficit. But I do not think the parliamentary assistant, the minister or anyone else will be inclined to say that merely because one is not facing a deficit one should be careless with public expenditures. I am sure they will not say that because one of the criticisms we have been making is that one of the dangers of large surpluses is that it is often difficult to make people really serious about economy. Economy is not a thing that anyone likes, and I have no doubt that if the parliamentary assistant feels it is worth replying to my statement, he will say that we on this side do not like economy any better than the government does. That will speak for itself.
I want to read briefly what was said by the premier of Nova Scotia, who is also the treasurer. He said:
When I speak of cuts in expenditures, I do not say or even suggest for a moment that any of the things that we have been doing have been unjustified or extravagant, and I do not wish that impression to gain any ground either in this house or outside of it. It is not a case of cutting out needless services or extravagant services. It is a case of having to make some cuts somewhere. It is a case of trying to fix priorities, and all that we can do is to hold on to those things that are absolutely essential, and dispense, for the moment at any rate, with certain things that, while desirable and good in themselves, are not so essential as the others.
I am not going to press this matter further. I realize it is a difficult thing, but I wish to point out that when the minister made his forecast last spring he went a long way towards saying he had tried to take into account the various increases that we were going to face. I do not want this criticism to be answered with the statement, "Well, prices have gone up." If the minister had come to this house and dealt with the matter seriously by saying, "Yes, we have been disappointed,"

I would have felt somewhat better about it. The impression which I received, and which I am protesting against, is that this weapon which ought to be, and has always been thought to be, one of the great weapons against inflation is really regarded now as, shall I say, abandoned.


James Sinclair: While I am very anxious to get this bill through, Mr. Chairman, I think an answer should be given to one or two of the points raised by the financial critic for the opposition. As he said, he has raised them before, both on an item which I was handling and directly with the minister when he returned from NATO. So far as this matter of treasury board control over government expenditures is concerned, when this bill was before the public accounts committee we had the deputy minister of finance as well as the secretary of the treasury board before us. They gave us an illuminating explanation of how the estimates were prepared by departments; how they were screened by treasury board with the aid of treasury officials stationed in every department, and of how economies were effected.
It is quite true that last year the minister estimated that there would be a reduction of $35 million in civilian expenditure over the expenditure of the previous year. Now, that was not easily achieved. Instructions were issued for an over-all reduction of 10 per cent in the number of civil servants in the civilian departments, most noticeably in post office, since that department is the greatest employer of labour. Everyone seems to be strongly in favour of economy in a general way, but when actual economies are effected it seems that members of parliament are the first to protest.


James MacKerras Macdonnell: I am glad I said that.


James Sinclair: I am glad you did, too, because I want to point out one or two instances. It seems that the Minister of Finance and the treasury board have better success in resisting the desires for extra services of the various departments of government than in resisting the repeated desires of members of parliament.
During this session we have had requests for bigger pensions, for bigger allowances, for more public works, for bigger grain payments. This morning we heard criticism because we were not going to embark upon a further $500 million plan of United Nations, not for loans but for gifts to underdeveloped nations. The job of the treasury board, of course, is an unpopular job when it comes to the details of resisting these demands for extra expenditures from the public treasury
Financial Administration which, in the end, have got to be met by the individual taxpayer. It is a difficult thing, as conditions are now, to accurately estimate in advance what costs will be. Every business firm in the country has that experience. I am sorry I have not with me at the moment the analysis I prepared of what the provincial treasurers had done in the last year, so far as both their estimates of revenue and their costs are concerned.
It is interesting to note that the provincial treasurers of three or four of our large provinces were very much more in error, if error is the word to be used, in their estimates of revenues than was the federal Minister of Finance. The same is true so far as expenditures are concerned, both in the provincial field and in many municipal fields. These public authorities were just as anxious for economy as are the federal authorities, and have found that increased wages, increased cost of materials, and in some cases shortages, which do add to the cost because of delay in construction, have caused the estimates they made last spring to be exceeded. But I should just like hon. members to remind themselves of the requests which have been made recently in this chamber for added payments from the public treasury and which have been resisted by the minister and by treasury board. As hon. members know, they have been resisted because of the desire for economy and also because there is on the part of many members themselves an inclination to regard the surplus as an invitation for further expenditures on whatever pet projects they may have in their ridings or in their provinces. I think that the record of the treasury board-


Stanley Howard Knowles: It is a case of our projects versus yours.


James Sinclair: As far as treasury board is concerned, their main project is to hold down the cost of running the country. Perhaps I can end on that note.


James MacKerras Macdonnell: 
The Chairman:: Shall the clause carry?


George Alexander Drew: No, Mr. Chairman. I think the point that has been raised by the hon. member for Greenwood is one that should not be passed over too lightly, because this perhaps will be the last time that there will be an opportunity to discuss the matter in relation to the responsibility of this particular department. At the time this measure was under consideration before, suggestions were made that there might be some way of establishing the responsibility of the minister and of the *department for presenting to the house an estimate which would be as accurate as possible, within the measurable errors that inevitably creep into broad estimates of this kind. At this stage it seems difficult for any representative of the government to say that we have suddenly been confronted with unexpected revenues which have given us a large surplus; because this government has, year after year, been producing these large surpluses which, in fact, are nothing but overtaxation-and extremely heavy overtaxation -at a time that the people are already greatly worried about the high cost of living.
The Minister of Finance was away at the time the discussion took place on the introduction of this bill into the house. When he came back from Europe he made a statement here which at no point suggested any concern on his part about the fact that, in the first six months of this year, every man, woman and child in Canada had been overtaxed- not just taxed but overtaxed-by $43 per head or, as I pointed out at that time, an average of $215 overtaxation for every family of five in this country, taking that still as an average unit. There was no suggestion by the minister that there should be any
[Mr. Macdonnell (Greenwood) .1

reason for concern about that overtaxation. On the contrary, he returned to the argument he had made from time to time that we should be pleased with the opportunity that such surpluses afford to make reductions in the debt of the country, by paying off certain of those obligations out of that surplus.
Mr. Chairman, some of these questions of principle may not have an immense appeal, but it is these questions of principle in relation to matters of that kind that determine whether or not our form of government is going to continue to have the vitality and the strength which it should have in these difficult years.
The point which, it seems to me, has not yet sufficiently impressed itself upon the government is that it is not the government's right to say: We fooled you by including an estimate which would do something good, but which we did not disclose to you at the time. That is like saying to a child to whom you have denied something: Well, my child, I am very sorry that it was necessary for me to deny you this knowledge at the time, but I always had the thought in my mind that I was going to be generous to you at some later date. That may, perhaps, be good child psychology; but we are dealing with the question of the responsibility of parliament and of the right of parliament to determine what money will be voted to the government itself for the business of Canada. The government has no right to place before the house estimates which contemplate the possibility of raising one cent of taxes beyond what they really anticipate and what they disclose to the house.
I have no doubt that the members of the house will support the government in sound business measures as long as those measures are discussed and as long as reasons for supporting those measures are put forward in clear and understandable terms. Nevertheless, it is a challenge to the authority of parliament at any time to say to parliament: We thought this would be a good idea. We did not mention it at the time we got the money, but we claim great credit for having overtaxed the people to a point that made it possible to do something good which you yourself never knew was going to be done. That is, in effect, exactly what we are told when it is said: There is a huge surplus. We did not disclose it. Perhaps we did not expect it, but we claim great credit for paying off the public debt.
By all means, let us do what is wise, sound and to the advantage of this country from the point of view of its economic strength and stability. But in the consideration of this section we come to a real question as to

whether or not the government was aware of the fact that there was going to be a big surplus of this kind. I would remind hon. members that when the budget was before the house last spring it was pointed out by members of the opposition that, in their belief, the government was planning for a surplus far in excess of that which was announced, and that the suggestion that certain taxes which were being levied were unnecessary was brushed aside. What 1 am saying now is directly relevant to a consideration of the importance of this section and the importance of impressing upon the government the fact that there must be some obligations under this section which have not been regarded. We pointed out over and over again that there was no need to impose a 25 per cent increase in the sales tax. We pointed out that there was no need to impress burdensome and irritating special excise taxes at a time when we clearly expressed our belief that the surplus would be far beyond the amount to be raised by these real nuisance taxes, and these taxes which have contributed so greatly to the increasing inflation in this country.
We are to be called upon before this session ends to consider a measure, the only measure put forward by the government, to deal with price maintenance agreements. The suggestion is that it would deal with inflation. What would have dealt with inflation a great deal more during this present session would have been to introduce some measures to correct the government's errors, and to have done away with these excessive sales taxes and excise taxes. That would have brought the government within some recognized sense of obligation to parliament to correct this position. It would have relieved inflationary pressures and it would not have simply placed before parliament a red herring like this legislation to deal with price maintenance which we shall be called upon to consider. We know that because of the time of the year the debates in this present session are drawing to an end; but I would remind the government that when its responsibility for overtaxation is being discussed every bank, every great financial organization in this country, every labour organization, every public body which has been called upon to present public reports at this time of the year in regard to our financial position, has emphasized the fact that inflation is the most dangerous thing that we face today in our domestic affairs.
Part of that inflation is being directly caused by the government's disregard for the figures it places before the house. Part of that inflation-and a substantial part of it-
Financial Administration is being caused by these excessive taxes which are directly inflationary. I am talking about the 25 per cent increase in the sales tax and the special excise taxes which have all joined in giving us this more than $600 million surplus in the first six months. The government has done all these things, and instead of in any way correcting them while we are considering the measure of supervision there should be over our financial affairs the answer simply is that, it is true, we have a surplus. We are going to use it in a very good way by paying off debts.
This morning we had the statement by the parliamentary assistant to the Minister of Finance that the provincial treasurers in several of the provinces have also had surpluses, and that in some cases these have been on a proportionately higher basis than that of the dominion government itself. May I point out that the provincial treasurers make their estimates upon the projected figures of income given to the people of Canada through this house by the dominion government, and also through their statisticians. Every one of their estimates is prepared upon estimates that had been made available to them by the departments of the dominion government, either through the statistical department or otherwise. One of the reasons that they have had corresponding surpluses is the inflation which is going on and which is being aided, abetted and supported by the action of this government itself. That is one of the reasons that their surpluses have gone up. If there has been a miscalculation on their part, that miscalculation has been related to the miscalculations of the government of Canada which has placed these figures before us. I am not, however, putting any brief before this house on behalf of the provincial treasurers; they do not need it. But I am pointing out that what has been occurring in the provincial bodies is in the final result simply indicative of the fact that the estimates of the dominion government year after year have been disproved by subsequent events. While we discuss this section I would point out once again that although it may not be possible to place in it any mandatory provision which will correct the situation, I do believe that at this time, when we are considering the financial operations of the government itself, there should be a clear understanding on the part of all hon. members and of the government that the very first responsibility of parliament is to express its approval of any moneys which are granted to the government for the business of Canada, with full knowledge of the facts; and when the government makes a miscalculation on one side or the
1994	HOUSE OF
Financial Administration other, an explanation is due to parliament which has not yet been given; and that by methods which are more accurate than this we have agreed that the government should seek in the terms of this act and in the spirit of this act to place before us figures so that members of parliament are really exercising their authority over the money voted to the government in this house.


[Stage Direction]
Section agreed to.
Section 6 agreed to.
On section 7-Regulations.
Stanley Howard Knowles: I wonder whether the parliamentary assistant will say a word or two on this section. I did not have the privilege of being a member of the committee on public accounts, but by keeping in touch with my colleagues who were I have tried to follow what has been going on in that committee. Further, I would point out that the printed record of the proceedings of the committee has not reached us yet, so that we cannot refer to it. I understand, however, that officials of the treasury board did make some statements to that committee with respect to the provisions of section 7 which would make possible rewards to civil servants who make suggestions for the improvement of government business. Can the parliamentary assistant say whether any such statements made it clear that it is the intention of the government to make use of the permission set out in section 7 (d) (i)?


James Sinclair: When the secretary of treasury board was before the public accounts committee he did make reference to this. He also made reference to the very able study which the hon. member for Winnipeg North Centre has made of this question and the speech he made in the house on it. In industrial firms in both Canada and the United States it has been the common practice to offer, in the form of providing rewards, incentives to employees of all ranks who offer information or suggestions which help the operations of the firms. The United States government has had such a plan in operation in their civil service for some time, and it was thought desirable that we should copy that plan, and so section 7 (d) (i) is, for the first time, making formal provision for it. Up till now of course there have been sections in the Consolidated Revenue and Audit Act which prohibited civil servants from accepting rewards for the discharge of their tasks, other than the reward which they got through their salary.
The secretary of the treasury board, when asked about the regulation, said of course that the regulations could not be drafted until this bill became an act, but that it had already


been given preliminary study and they hoped to have regulations in effect very shortly after the act was proclaimed.


Mr. Adamson:: Will the rewards be tax free?


James Sinclair: No, they will be income.


Mr. Harkness:: So far as 1 understand the matter, the general purpose of this legislation in relation to the treasury board is to increase the powers of that board and to put it in a position where a very considerable amount of the routine material which up to this time has had to be dealt with by the privy council can be handled by the treasury board. In order to enable it to have these increased powers, these regulations, which the treasury board are authorized to make, are listed. I would like to refer particularly to paragraph (e), which reads:
The treasury board may make regulations subject to any other act, for any other purpose necessary for the efficient administration of the public service.
It seems to me that that is a very wide power. I have wondered whether something else could not be substituted, because this would seem to give the treasury board the power to make almost any sort of regulation. All they have to say is that in their opinion it is necessary for the efficient administration of the public service. Could the parliamentary assistant tell us whether any consideration has been given to phrasing that differently, so that the power would not be so all-embracing?


James Sinclair: After all, treasury board is merely a subcommittee of the cabinet. Many matters which, fifty or sixty years ago, may have been considered very important, including those affecting civil service employment, for example, are no longer dealt with by the cabinet. In practice however the treasury board minutes still have to be approved by the governor in council. The first part of the section does relate to the treasury board minute as the final authority in a great number of these routine cases.


Douglas Scott Harkness: I do not think anyone objects to that.


James Sinclair: I am sure that is so. Paragraph (e) simply puts into a statute what has been done by practice for many years. Perhaps I could give three or four samples of the sort of thing that has been covered by treasury board, under delegation of authority from the governor in council. These would include the settlement of damage claims against the crown; action to be taken with regard to damage to or loss of public property; compensation to employees for loss or damage to property or personal goods

occasioned in the carrying out of their duties; the placing of insurance on public property; financial liability to the crown, and some others. Insurance, for example, is not normally placed on public property, because the government of Canada is such an enormous holder of property that it can carry its own risk. In special cases however insurance is necessary.
These are routine matters in which the actual authority does rest with the governor in council but which, in practice, over the years, the governor in council has always delegated to treasury board. All we are doing is to make a provision in the financial admini-tration bill which would make that statutory.


Douglas Scott Harkness: I agree with everything the parliamentary assistant has said. But my question was as to whether any consideration had been given to phrasing this in some way which would not give what might be described as unlimited powers to treasury board.


James Sinclair: They are certainly not unlimited powers, because these are all powers which are now held under statute by the governor in council. It is a matter of turning back to treasury board by the governor in council certain matters for final action. The difficulty in spelling it out is that this is a sort of basket section. One cannot foretell very clearly what these small matters, which come outside the regular run of affairs, may be. Under this measure they would be dealt with by treasury board, as they have been in the past.


Douglas Scott Harkness: My own objection is that it is the kind of legislation which is capable of abuse. I am not saying that it will be or that it has been abused; but it puts treasury board in a position where it decides as to whether something is necessary for the efficient administration of the public service. They are the people who would decide it. They must make the decision as to whether they will make regulations-and, for all practical purposes, I would understand that these regulations are laws. Everyone must obey them, or they are subject to penalty.
It seems to me it could be possible to provide all powers required by treasury board without giving them what has been described by the parliamentary assistant as a basket authority-and, I would say, a bottomless basket.


James Sinclair: I am afraid I have not made myself clear. The governor in council has these powers now. These are powers other than those spelled out in the statutes. For
Financial Administration instance, they would include compensation to an employee travelling down from the Northwest Territories to fill a post in some other part of Canada and who, in the process of travelling, has lost his household effects which are moved by the government from the north country. Under the statute the governor in council has the right, first of all, to say whether a refund should be made, and then to say to what extent it shall be made. In practice the governor in council has always referred a matter of that kind to treasury board. True, treasury board would study it and place a minute, along with a great many other minutes, before the governor in council. But those would go through in routine fashion.
All that is being done now is to say that in those matters where the governor in council decides it should be handled by the subcommittee, it can be so handled.


[Stage Direction]
Section agreed to.
Section 8 agreed to.
On section f)-Management.
Agar Rodney Adamson: Mr. Chairman, I wish to make some observations, and also a suggestion. I believe what I have to say might properly be said under this section which states, in part, that the minister shall have control and direction of all matters relating to the financial affairs of Canada not by law assigned to any other minister. I believe I have quoted the pertinent part.
When the Minister of Finance spoke in the house the other day he mentioned-and I think accurately-the difficulty of estimating revenues as compared with the comparative ease in estimating expenditures. Therefore it seems to me that measures which would do away with double taxation are not only helpful to the taxpayer but are also beneficial to those authorities charged with the work of drawing up the budget. No other country in the world suffers from double taxation as much as we do in Canada. The Minister of Finance has admitted this, and has mentioned it as one of the problems of the whole financial structure of the country.
He has attempted in a small way to overcome these abuses of double taxation by making certain very small allowances on dividends paid by corporations. I would mention again that in the United Kingdom the corporation pays its income tax, and then the resultant dividend is sent to the shareholder as a tax-paid payment. In Canada, on both levels, the corporation and the individual pay income tax.	[DOT]
That is one matter which I suggest should be considered carefully by the government,
1S96

Financial Administration particularly when corporation taxation in some places has now reached something more. than the 50 per cent level. I suggest it is not good economy and it is not helping to meet inflation to have these enormously high taxes. They serve merely to increase the final cost of the end product to the consumer.
However, that was not the case I wished to bring to the attention of the parliamentary assistant. What I wished to make clear is the matter of double taxation of taxpayers who pay municipal taxes. I have brought this to the attention of the government before and I do so again in the hope that some consideration will be given to the matter when the budget is under review by the Department of Finance.
At the present time municipal taxation is increasing at an enormously rapid rate. That taxation is imposed on the one security many people have, their house and home. It is being levied, not on the fairer principle of ability to pay but on the capital value of the taxpayer's home and property. If a man's income goes down, he pays less income tax, but so long as he lives in a house, the taxes on that house go up as the expenditures of the municipality increase. I consider that the fundamental security of the average Canadian is his house and home and every effort should be made to maintain that security. Therefore, I make this suggestion to the department that in the next budget provision be made to allow taxes paid to a municipality on the taxpayer's dwelling as a deduction from income for tax purposes.


James Sinclair: The taxation policy of the government has nothing to do with this bill. That would be covered by the income tax bill and that would be the appropriate place to raise it. This section 9 has been in the act since confederation and it merely provides that the minister shall be responsible for the handling of the consolidated revenue fund. I think that if we are going to get this bill through we should confine ourselves to the actual sections.


Agar Rodney Adamson: I simply wanted to draw this to the attention of the minister as we will not have another opportunity during this session to discuss it. It is a matter of great urgency in the country today and I repeat my suggestion that not only municipal taxation, but taxation for educational purposes, be allowed as a deduction from income. I realize that perhaps this should not be brought up under this bill but I crave the indulgence of the committee to bring it to the attention of the minister because it is of immediate and urgent importance and has a great bearing on the well-being of the country.


[Stage Direction]
Section agreed to.
Sections 10 to 16 inclusive agreed to.
On section 17-Minister may acquire securities.
James MacKerras Macdonnell: If I may
have the indulgence of the committee I should like to ask the parliamentary assistant a question with regard to section 7, subsection (e). I ask him to consider whether the words "the public service" are not unnecessary and whether the words "of public moneys" would not meet the point raised by the hon, member for Calgary East. I do not press this further at the moment; I simply ask the parliamentary assistant to consider it and perhaps he can let me know his conclusions later on.
In connection with section 17, I may say that we had a rather interesting discussion in the committee, particularly with regard to the management of public money. It seems to me that there has been some unwillingness to use words accurately in the department. We had a discussion in the committee on the question of supporting the bond market. From an interesting statement made by one member of the staff it became quite clear that during the war years the government, either directly or through the bank, bought and sold bonds to the value of some $2,700 million. I think everyone understood and no one criticized the reason for doing that. In order to maintain its securities in public favour and promote the sale of future securities the government had to concern itself with the status of the bond market.
I mention that because there is a great unwillingness now to use the word "support". Even as sensible a man as the minister backed away a little from the use of the word "support", although I shall quote his own words in a moment or two to indicate that he used several words where the simple word "support" would have done. I do this because this is an important matter and it is most desirable that we should have a clear understanding of these things. Otherwise we shall all be fooled and the public will be irritated. Of course, the public is irritated at the moment because a lot of them believed and, as I have said in this house before, were led to believe that somehow, if they bought a 3 per cent government bond at say par or better, it would not go below par.
A responsible member of the financial community once said that to me. I said to him, "Why cannot they go below par?" He said, "Because Mr. Ilsley said they would not." The parliamentary assistant shakes his head. I am not going to charge Mr. Ilsley with saying that-I am sure he did not say it-I am

simply pointing out that that impression got abroad. 1 should like to read just what was said at that time.
The other evening in the committee the minister expressed a view which I thought was most sensible, as to interest rates and prices. I thought that he was using words in their proper sense, but I do not think his predecessors were quite as careful in all cases. I have here a statement got out in 1945 entitled "Victory Bond Prices" which I received from a most respectable source and which contains a statement by the Right Hon. Mr. Ilsley and, more important and to me much more surprising, a statement which came from the Bank of Canada.
I cannot help but think how easy it must have been for a bond salesman, first, to make himself believe and, second, to make other people believe that this was virtually a guarantee that bonds would not go below par. What Mr. Ilsley said was quite general; it created what I would call a pleasant atmosphere toward the bonds. When I read the statement from the Bank of Canada hon. members will realize how far responsible people went to make themselves believe that low interest rates had become the law of the universe. Here is what Mr. Ilsley said:
It will be of the greatest importance that we maintain, indeed assure, a ready and stable market for all these millions of bonds that we have sold. We have now the monetary and financial machinery and we have developed the methods for accomplishing this, and we will therefore be able to deal with any situation which may develop in a way which will keep faith with the millions of investors who are supporting the savings program in this national emergency.
There is nothing said there about guaranteeing bond prices, but I do not think anyone will disagree when I say that it would not need a very enthusiastic salesman to be able, as I said, to make himself believe and then to make his customer believe that what was really meant was that bonds would not go below par. Here is a statement taken from a Bank of Canada report which to me is surprising because it goes a good deal further. It reads as follows:
Government bond prices reflect the level of interest rates. A decline in bond prices could happen only if interest rates were to rise. In my opinion, the needs of the future will require and enable the kind of monetary policy which has brought about the current level of interest rates. Continuance of this policy means stability in victory bond prices.
That does not say that the bonds will not go below par but I say again that I do not think it needed a very enthusiastic salesman to believe that. When I saw that statement I was surprised. It went further than I had realized that responsible authorities had ever gone. I have quoted this statement partly
Financial Administration because I want to go on now and read a short statement the minister made in the committee. He said:
I believe in the law of supply and demand with certain reservations. I do not believe there is any such thing as a fixed interest. I believe in the use of the interest rate, and so far as the government securities are concerned I think that the holder of government securities must buy them on this basis.
I would not disagree with a word of that. The only thing is I am sorry that responsible authorities ever led anyone to believe anything else. Of course in England they are busy now trying to reassert what I think all sensible people have believed, that fixed interest rates are something that are inimical to anything like a free economy. Continuing our discussion with the finance minister in the committee, we got onto the question of support, and I was a little surprised. The minister did not seem to like the word "support", but I am going to read what he said and leave it to any fair-minded man as to what these words mean. He said:
All I think any government should ever attempt to do in the management of public debt is to see that there is an orderly and stable market for its securities, and the price that is paid for those should be determined over the long pull by the demand for them and by other matters of monetary policy in which of course no country can be entirely independent.
I come back to the words "orderly and stable market for its securities". I submit you can give no meaning to them whatever unless-and I think it a proper thing-it be that the government is supporting its securities just as we were definitely advised it did during the war and as it has done since. As a matter of fact up to 1948, I think it was, the Bank of Canada quite openly indicated what its paying prices were, and I hope we will have none of the make-believe which I suggest has taken place during the last few years. I do not think anyone who has cut his eye teeth in the financial community has any doubt whatever that assuring an orderly and stable market for securities means that you have to be ready to support the market. If it is going to have a sinking spell it would be in the highest degree foolish not to do so. We know it is done in England and elsewhere.
I have brought up these matters under the heading of monetary management. Someone may say: Well, are you not making an awful lot of fuss about the use of words? I do not think so because it seems to me that, unless we are going to be perfectly frank and clear with each other as to what is actually going on, unless our thinking is clear, our actions are apt (to be foggy. I express the hope we

Financial Administration will not have any more-what shall I say- by-passing of the words which describe what is actually going on.


Mr. Wright:: Mr. Chairman-


James Sinclair: I think the hon. member for Greenwood has again done a service as far as the bond holders of Canada are concerned by drawing to the attention of the people once again that the interest rate on a bond is a price. I am glad he agrees with the statement the Minister of Finance made to the public accounts committee the other night. However, why I rise is not so much for that as to repeat, in fairness to the former minister of finance, Mr. Ilsley, the statements which he made when he was minister. It may be quite true that enthusiastic bond salesmen selling bonds during the war in patriotic drives may have led the individual citizen to believe that his bond was cashable at any time before maturity for face value. I am glad that the hon. member for Melfort just rose because my recollection is very clear that each year some member of the C.C.F. party-and it was generally the hon. member for Melfort- would rise and ask Mr. Ilsley whether or not he would guarantee that these bonds would be redeemable at any time for $100. On every occasion Mr. Ilsley was quite definite in saying no. He did think there would always be a good market for them and that the security of Canada was the best security that could be offered behind any bond, but at no time did he, speaking as minister of finance in the House of Commons, ever say or give any indication that they would always be redeemable at par. At the end of the war, the hon. member will recall, we put out one issue of savings bonds at a lower rate of interest which are redeemable, as is the case with the last issue, for their face value at any time. However, they were limited in the amount which could be held by any individual, and carried a lower rate of interest, which gets back to the point of the Minister of Finance (Mr. Abbott) that in no one instrument can you expect high security, high liquidity and a high rate of interest.


James MacKerras Macdonnell: I want to make it clear that the farthest thing from my mind was to suggest that Mr. Ilsley ever did so. I think he was a good man in adversity. I think immense pressure must have been put on him to go as far as he would go, and he certainly avoided it.


Percy Ellis Wright: The parliamentary assistant to the minister has indicated Mr. Ilsley's stand quite correctly with respect to suggestions made by myself and others in this group with regard to having victory bonds
(Mr. Macdonnell (Greenwood).]

issued during the war made redeemable at par. He did not do that although Mr. Ilsley did indicate that no government could afford to allow these bonds to fluctuate too violently. I think that is a fair statement of what he said. However, recently the Minister of Finance has been selling bonds at a very slightly lower rate of interest than was paid on other bonds which are redeemable at par. They seem to have come around to that idea, and the bonds that have been issued in the past three years if held for ten years will yield an interest rate of approximately 3 per cent, which is about the same rate as was payable on some of the older bonds. Therefore it can be done and is being done.
I am glad that the hon. member for Greenwood has come around to the point where he realizes that there must be a stable market for Canadian bonds. We in this group believe that, as well as the dominion government having the responsibility for maintaining a reasonably stable market for Canadian bonds, it should also be prepared to maintain a reasonably balanced economy in this country through the operation of certain controls. Do not let anyone get away with the idea that we have not got controls today. There is the control of taxation. There is the rediscount rate of interest which is controlled by the Bank of Canada. There are controls on borrowing. The government is using all these controls to maintain a reasonably stable economy, and I think they are right in doing so.


Agar Rodney Adamson: The fact is that the Bank of Canada is almost the sole bidder for government bonds at the present time.


[Stage Direction]
Section agreed to.
Sections 18 to 22 inclusive agreed to.
On section 23-Uncollectable debts.
Mr. Herridge:: I should like to ask the parliamentary assistant a question on this section concerning uncollectable debts. I have noticed a few cases of companies going bankrupt and owing the department certain amounts for sales tax collected from their customers. I know of one company which, having collected sales taxes over a period of a year or so, owed them for that period or longer and then the company went into bankruptcy. I have personal knowledge of one or two companies where the department apparently made no attempt whatever to collect that sales tax from the estate. I should like to ask the parliamentary assistant to explain what is done by his department to collect these amounts owing in case of bankruptcies. Then, in the case of companies, I presume there is no criminal prosecution, but is there a criminal prosecution in the case of individuals owing sales tax?


James Sinclair: This section on uncollectable debts was very carefully canvassed by the public accounts committee two years ago. Then last year we made a report to the house in which we recommended the write-off on uncollectable debts up to 1940. The uncollectable tax debts to which the hon. member is referring are handled by the Department of National Revenue.
First of all, in the case of bankruptcies when there is sales tax which had been paid by the purchaser, and which is still owing by the manufacturer who went into bankruptcy, I believe that the crown has a priority in the bankruptcy proceeding. In most bankruptcy proceedings there is nothing left and you cannot collect, but the crown is at least the first creditor. In my experience I have never heard the Department of National Revenue criticized for being too lenient in attempting to recover taxes owing. In the second place, where the receiver of funds for the government, whether they be sales taxes or unemployment insurance premiums, misappropriates the funds he is subject to criminal prosecution which is undertaken by the Department of Justice.


[Stage Direction]
Section agreed to.
On section 24-No payment out of C.R.F. without authority from parliament.
George Alexander Drew: I should like to make a short observation on this section. It states in most explicit terms that, subject to the British North America Acts, 1867-1951, no payment shall be made out of the consolidated revenue fund without the authority of parliament. I desire to go back again to the fact that there is a clear declaration by statute, which we are now approving, which should be regarded as having a very positive meaning that no payment shall be made without parliament actually knowing it is going to be made for that particular purpose.
I should like to quote what the Minister of Finance said about that surplus as recorded at page 1729 of Hansard for December 10:
. . . we can congratulate ourselves. I think, that we have had a substantial surplus so far this year; because if we had not had a surplus we would have been obliged to borrow additional new money to the tune of $300 million to finance housing, the C.N.R. and other government loans and investments, and another $200 million to meet maturing debt, or $500 million in all.
Now, that is what the Minister of Finance told the house a few days ago. What he says in that statement is that, in the budget estimates presented to this house, he did not disclose $200 million required for refinancing, and he did not disclose these other obligations which the government would have been called
Financial Administration upon to meet. This means that the budget was incomplete, in so far as the information to this house was concerned, to the extent of $500 million.
It is no answer to say that a very desirable course has been followed in paying off that $200 million of public debt which was maturing out of surplus instead of refunding it or issuing any new form of securities. I come back to the point of section 24, which we are now called upon to adopt as the law of this country. It says that no payment shall be made without the authority of parliament, and that means with parliament knowing it is to be paid for a specific purpose. No matter how good the idea, no matter how desirable the purpose, it is not proper for the government to make this decision as to how the money will be spent. The decision must be made when the need for it has been disclosed to parliament and parliament has approved.


James Sinclair: A very important point here is that, so far as the refunding of maturing debt is concerned, or the payment of it, that is authorized by the statute which authorized that borrowing to be made in the first place. The borrowing referred to this morning of $111 million authorized this spring for the Canadian National expenditures is the authority of parliament to make that borrowing, and whether the borrowing is done on the open market or out of funds currently held in the consolidated revenue fund is a matter for the discretion of the minister under section 17 of this act, part II, where he is given management of public funds.


George Alexander Drew: The point I am making, Mr. Chairman, and I do submit it is an extremely important point, is this. While there can be no question about the authority of the minister under the statute to refinance maturing obligations, while there may be no question about the legal authority of the minister and of the government to appropriate any surplus for any purpose, I am simply pointing out that any surplus is an overtaxation above the amount which parliament has authorized. The fact that the government is going to use that overtaxation or surplus, whichever you call it, for a particular purpose, as it has a legal right to do, does not justify the government obtaining the approval of a plan of taxation which will raise that money without parliament knowing that the money is to be raised for that particular purpose; that is my point. There are a great many things for which the government can appropriate money under various statutes, but when it is said that the government may not make payments out of the consolidated revenue fund without the

Financial Administration
authority of parliament, I submit that means that parliament has the right to know in advance, before it approves the amount that will be made available to the government, exactly what the purpose is.


Agar Rodney Adamson: I should like to ask one or two questions of the parliamentary assistant, so will the chairman call it one o'clock?
At one o'clock the committee took recess.
The committee resumed at 2.30 p.m.


Joseph-Alfred Dion: When we took recess at one o'clock we were at section 24. Shall the section carry?


James MacKerras Macdonnell: Mr. Chairman, the hon. member for York West said he had one or two questions to ask. He is not here yet. Might that section stand over?


Joseph-Alfred Dion: Shall the section stand?


James Sinclair: Stand.
Section stands.
Sections 25 to 35 inclusive agreed to.
On section 36-Accountable advances.


Percy Ellis Wright: Subsection 3 of this section reads as follows:
The comptroller may recover any accountable advance or any portion thereof that is not repaid or accounted for as required by subsection two out of any moneys payable by His Majesty to the person to whom the advance was made.
As a general principle, I think this is a perfectly sound one, namely the principle that moneys owing to the crown should be recoverable out of money which the crown owes to the subject. I want to point out, however, that even a good principle can go too far. As to this particular subsection, questions were asked in the committee and it was determined that money could be recovered out of old age pensions, out of children's allowances, out of dependents' pensions and compassionate pensions paid under the Pension Act. That is a good principle, I think, where the moneys are owed because some false statement has been made in the obtaining of that money. But the principle can be carried to a point where it will work a real hardship on some people. I want to give an instance of where this might occur.
In western Canada, from 1906 on to 1912 or 1913, numbers of seed grain advances were made to settlers. Many of these seed grain advances were never paid. There is set up in the department a board which reconsiders these old debts. I have had occasion to take certain cases before that board and have

found that the board has been most considerate. But in some of these cases those old advances have now multiplied to such an extent that they are three times the amount that was originally owed. Interest has been compounded for thirty years on some of these debts.
In taking a case before that board, I have found that they have considered the assets of the debtors as at today, and that they have made reasonable settlements in cases where these debts have been taken before them. But these old-timers who settled in the west have now an added asset in their old age pensions, and that added asset may be added to their total assets in order to determine the amount of the loan which is repayable, if this particular section is to be applied as it reads here. If it is not to be applied as it reads here in the section of the act, some amendment should be made either in this act or-and I think this would be preferable-the Old Age Security Act.
The Minister of National Health and Welfare certainly gave us to understand that when this old age pension became payable, it would not be attachable from any source. Now the crown can attach the old age pension through this section. Not only can the crown attach the old age pension but they can attach, for money owed to the crown, family allowances. If this particular subsection 3 of section 36 is to stand, I certainly think some amendments should be made to the Family Allowances Act, the Old Age Assistance Act, the Old Age Security Act and the Pension Act where it applies to dependents' allowances or compassionate allowances.


James Sinclair: Mr. Chairman, the present discussion is appropriate under section 95, subsection 1. This section 36 is only as to regulations for the recovery of accountable advances made to persons in the public service. Section 95, subsections 1 and 2, is the section on debts due to the crown, and also there is provision there for the collection of old debts. Therefore if we let the matter stand until we get to section 95, I will speak to it then.


Percy Ellis Wright: What about the seed grain loan? They are advances.


James Sinclair: The seed grain loans or advances are not advances in this sense, that of being accountable advances made to a civil servant, for example, for travelling expenses, which he has to account for at the end of the year. That is section 36 which we are now discussing. But section 95, debts due to the crown, is the section which covers the remarks made by the hon. member, and

that was the section under which we discussed the matter in the public accounts committee.


[Stage Direction]
Section agreed to.
Section 37 agreed to.
On section 33-Term of contract that money available.
James MacKerras Macdonnell: I wish to raise a question here as to the undesirability of importing into a contract terms which are not written into it and which are merely deemed to be there. This question was raised by the hon. member for Eglinton in the committee, and I propose to read something from his evidence. But first of all I want to meet the point which has been made-and I know it has been quite sincerely made- namely that the intent of this clause is to maintain the control of parliament over expenditures. Having said that, I wish now to read from evidence of the hon. member for Eglinton because I think he has made it clear, and I do not see any reason why the objective of those who framed the act cannot be achieved without running the risk which the hon. member for Eglinton pointed out. This is a quotation from the evidence of the hon. member for Eglinton in the committee:
I can see the desirability for a provision like this from the point of view of maintaining parliamentary control over expenditure, but I am wondering how it is going to affect the rights of private persons contracting with the crown. Now, this seems to say that even though it is not made an express term of a contract entered into by the crown with a private person, nevertheless, by this legislation a term is imported into that contract which might work very seriously to the disadvantage of that person if he did not have the good fortune to be aware of the law. It may not be that that is the intention of the act, but it seems to me that that is a consequence that might flow from it.
Again, from the evidence of the hon. member for Eglinton:
It seems to me there cannot be any objection to that term if it is written into the contract in every case, but I have a very strong aversion toward legislation which simply takes every government contract and says, whether there is a clause in there or not, it will be deemed that this clause is written in there, whether people contracting with the government know anything about it or not.
Before we go any further perhaps I might make this suggestion and it is certainly not said with any disrespect to the parliamentary assistant. This is a legal question and since the hon. member for Eglinton who is a lawyer is not here, and the Minister of Finance who is also a lawyer is not here, perhaps this clause might stand.


James Sinclair: I can give the explanation which the minister gave when he came before the committee two nights ago on this very clause. It has always been a term of
Financial Administration government contracts that there was a condition that a parliamentary appropriation would have to be passed. That is the first question.


James MacKerras Macdonnell: Does the
parliamentary assistant mean an implied term?


James Sinclair: It has been a term as far as practice is concerned. I am quite sure any contractor who consulted his lawyer with regard to the terms of such a contract would learn that since confederation it has been to the knowledge of every contractor doing business with the government that first of all a parliamentary appropriation would have to be passed; and second, there would have to be unencumbered funds in that amount. The first situation which arises is mainly owing to the climatic conditions of this country. Our estimates are brought down during the course of the spring session. They are generally not approved until June or July. Public works in the northern part of the country, if they are not commenced in May or June, are very likely not to be finished before the cold weather arrives. Contractors have been willing to undertake those contracts with the knowledge that if parliament did not approve the appropriation then there would be no money forthcoming. But the minister did point out that since confederation there has never been an occasion like that. The different point that arises of course is one which could have arisen in 1949 where, between the submission of the estimates in the house and their final approval by the house, an election intervened. In that case I think the contractor would be doubly careful not to embark on any contract with respect to which there might be some likelihood of another government coming in and not going ahead with it.
All that this section 38 now contains in statutory form is the practice which has been followed since confederation. The point raised by the hon. member for Eglinton was not that. He went along with that, but he thought that it should be a term written and spelled out in every government contract that this was subject to an appropriation of parliament being voted and being available. It was pointed out at that time that the great bulk of government contracts are not affected by this consideration. It is the contracts which are awarded for work such as those which, because of the short construction season in many parts of Canada, have to be commenced late in the spring if they are to be done at all. And certainly every contractor who puts in a bid for that type of work is well aware that there has been this practice since confederation, of there being a contingency of payment that parliament should pass the appropriation.

Financial Administration


James MacKerras Macdonnell: The parliamentary assistant has spoken with great certainty. What he actually says is that this practice is within the knowledge of every contractor. That is a pretty broad statement. As a matter of fact, the hon. member for Eglinton, who is a man of very considerable legal practice and not a man who shies at shadows, was equally positive that he did not think this was within the knowledge of every contractor, and that there may be cases where the practice is not known. The question I want to ask is: Can there be any possible objection to having it written in the statute that it has to be written in the contract? Can there be any possible conceivable objection to that?


James Sinclair: It was pointed out the other evening that, as far as the big contracts are concerned, the contracts to which this thing might apply, the contractors knew. When I say "every contractor knows", I mean every contractor who is going to bid on one of these northern projects.


James MacKerras Macdonnell: Why not the
little fellows, too?


James Sinclair: The ordinary tens of thousands of little purchasing orders which the government undertakes yearly are not affected by this type of condition, and certainly there would be no point in inserting that stipulation in every little purchasing order made by the government. That was the opinion expressed by the minister and by the deputy minister of finance when this point was raised in the public accounts. The fact that never since confederation has the issue arisen shows that the practice is well understood by those who are contracting for this type of work.


James MacKerras Macdonnell: I think that is fair comment, but I do not think it covers the case fully. I come back again-and I am not going to take the time of the committee on this-to the point, and say that nothing has been said yet which makes me believe that there is any difficulty in these contracts. I have no doubt that a formal clause could be put in, but you could make some reservation, if you want to protect cases where there is merely an exchange of letters, or something of that kind. But I do not think any effective answer has been made to the request of the hon. member for Eglinton.


[Stage Direction]
Section agreed to.
Sections 39 to 62 inclusive agreed to.
On section 63-Accounts of Canada.
James MacKerras Macdonnell: I just want to say a word about this section. I had rather hoped that some change might be made in
(Mr. Sinclair.]
the form of casting up the public accounts, bringing them nearer to the income and expenditure system which is practised in business; but I must confess that after hearing the arguments made, after hearing the practices and reviews made in Great Britain quoted, I was convinced that probably no substantial change should be made. The Minister of Trade and Commerce will not mind my saying that I quoted him once or twice as having referred to the somewhat unusual way in which public accounts are kept, compared with those of private corporations; and I also quoted anonymously a preceding minister of finance who used to speak in the same way. I must confess the great aim of public accounts, which is to maintain the authority of parliament year by year, seems to me to be served by the present system, and therefore I have no criticisms to offer.


Agar Rodney Adamson: The question I have to ask arises from a statement of the Minister of Finance. I asked about the redemption of securities that were paid off and he said he did not have the information there at that time. I would imagine it would be under this clause that securities redeemed and paid for would be enumerated.


James Sinclair: Was this question asked in the public accounts committee?


Agar Rodney Adamson: No; it was asked in the house. I am not a member of the public accounts committee. I asked the Minister of Finance what were the serials, what-were the securities that were paid off? He mentioned that a certain number of securities were paid off, and that the surplus had been used for that purpose. I would imagine that under this clause the numbers and the amounts of the dominion government securities redeemed would be mentioned.


James Sinclair: If the hon. member is referring to the statement that part of the surplus this year was used to meet the maturities which became due this year, they are normally shown in the public accounts, but of course the present year's retirements will not be shown in the last volume of public accounts because it has to do with the fiscal year ended March 31, 1951.


Agar Rodney Adamson: I see that. My point is, there is no way of knowing where the current repayments of our funded debt are shown; that is, they are not shown until a year later in the public accounts committee.


James Sinclair: That is true of all the public accounts of Canada. But any member of parliament who wants specific information on a current transaction can put a question

on the order paper and receive from the department the information he wishes to have.


Agar Rodney Adamson: I realize that. I did ask the Minister of Finance, and he said he did not have the information. I feel it would be helpful if some arrangement could be made, when a certain security is redeemed and paid off, to have the information brought down and tabled in the house.


[Stage Direction]
Section agreed to.
Sections 64 to 75 inclusive agreed to.
On section 76-Crown corporations.
James MacKerras Macdonnell: Mr. Chairman, I wish to make some comments with respect to section 76, the first of the sections under part VIII, which deals with crown corporations. I believe this part of the bill does a good deal to clarify the situation. However, there are two points I should like to raise. First of all, a good many of the crown corporations are incorporated under the provisions of the dominion Companies Act. While I appreciate that there may have been some convenience in that-and, it may be, an overwhelming convenience- nevertheless on the face of it it seems to me undesirable that crown corporations should be incorporated under a statute which gives the powers given by the Companies Act. Many of those powers are utterly unsuitable to an emanation of the crown.
For example, let me refer to a few of the powers given under section 32 of the dominion Companies Act. Under that section a company has power to carry on any other business which may seem to the company capable of being conveniently carried on; it has power to purchase or otherwise acquire and undertake all or any of the assets of any other company; it has power to amalgamate or enter into partnership, and so on. I will not go through the list of them.
Members of the committee will agree that those to which I have referred are not powers suitable for crown corporations set up for very definite purposes. I would like to hear some comment from the parliamentary assistant; and perhaps the Minister of Trade and Commerce might care to comment upon it. This question of powers is of some importance. There may be other controls within the departments concerned which may hedge these broad powers round. Of course one is not going to assume that the directors will be so irresponsible as to take advantage of powers to which perhaps they have a technical right, but which they were never intended to enjoy.
Financial Administration
It does not seem to me a sensible practice to have companies incorporated with powers they were not intended to have. I am wondering whether there is any real objection to these powers being spelled out in the statutes, as actually is the case in connection with some of the crown corporations.


James Sinclair: In answer may I point out first of all that this bill has nothing to do with the actual form of incorporation of crown companies. What it is doing for the first time is to give a uniform measure of financial control over those companies divided into the categories set out in the schedule. Why some crown companies were set up under the dominion Companies Act, and other crown companies set up under special statutes of parliament, is a question I cannot answer. Further, it is a question beyond the scope of the bill.
The purpose of the bill is to provide a uniform method of financial control for the various types of crown corporations, and to provide for their annual reporting to parliament, through the appropriate minister. Perhaps the point raised by the hon. member could be dealt with more adequately by the Minister of Trade and Commerce.


Mr. Howe:: Mr. Chairman, the crown companies that are of major importance at the moment are those that compete in fields which are not occupied by private industry and are not likely to be occupied by private industry, but which have the same problems as are met by privately-owned companies formed under the Companies Act.
It is my own theory that they should have the same latitude as private companies, subject to the checks provided through government ownership. All such companies must have their budgets for the year approved by the governor in council. I believe it is to be the practice that the budgets will be examined in future by a committee of parliament. I have suggested some time in the past that that be done, but parliament has never taken any particular interest in that phase of the matter. After obtaining approval they are allowed to proceed to carry out the approved items in the budget, pretty much as management shall decide, but with a close check on finances by the department and by the Auditor General.
I think it would be a mistake to limit the powers of a crown company to the extent that its management could not carry on business as effectively as could a private company in the same field. We have two very prosperous crown companies; and I think the reason for their prosperity is that their directors have been able to function

Financial Administration as well under government ownership as they would have if the companies had been privately owned.


James MacKerras Macdonnell: And, as the minister has explained, the reason is that they are not crown companies: they are his companies.


Clarence Decatur Howe: Well-


Agar Rodney Adamson: Would the new St. Lawrence authority come under this regulation?


James Sinclair: Not yet, because it has not been established. The departmental corporations, agency corporations and proprietary corporations set out in the schedule provide the classifications in which any new crown agency would be placed. Where it should be placed will be decided when the time comes. The Minister of Trade and Commerce now informs me it will come under schedule C.


Agar Rodney Adamson: And the audit of expenditures, whether it be a company authority, or in some other form, would come under this section?


James Sinclair: Yes; section 77 refers to the audit of crown companies. Most of the audits are carried on by the Auditor General. I am informed it is the intention that the St. Lawrence seaway authority will be audited by the Auditor General, and his report is of course submitted to parliament.


Mr. Green:: Would the Minister of Trade and Commerce name the two companies to which he had reference a moment ago?


Clarence Decatur Howe: The Polymer corporation and Eldorado. They are the two producers.


Howard Charles Green: Both have monopolies, have they not?


Clarence Decatur Howe: Yes; if they did not have monopolies they would be crown companies in a competitive field, which is contrary to government policy.


Percy Ellis Wright: When the bill was before the public accounts committee I endeavoured to have an amendment made to one of the sections whereby not only would the annual statements of crown corporations have to be tabled in the house, but they would have to be placed before some special standing committee of the house for consideration. My amendment was ruled out of order.
I agreed that it might not have been in order, although as a result of it it was found necessary to change another section which had been passed earlier. No one had noticed that in that section there was a reference to a special committee of the house.

Two years ago and again this year, in its recommendations to the house, the public accounts committee has recommended that the annual statements of these crown corporations should be placed before special standing committees. I asked Dr. Clark, the deputy minister, if there was any reason from his department why these annual statements should not be placed before special committees. He said that in his opinion there was no reason.
Today the government is in business in a big way. Some of these crown corporations are handling more money than is being handled by some departments of government.
I referred in particular to the wheat board and I suggested that that board be placed in one of the schedules to the act. It was pointed out to me that there were certain disadvantages in doing that, and I agreed. Probably there are regulations in the act which would not be applicable to the wheat board. However, we have this wheat board, a crown corporation, handling hundreds of millions of dollars' worth of the growers' money each year. Those growers have no way of checking the annual statements beyond reading them. There is no body representing the growers before which the annual statements of the board can be placed and considered by the growers. They must depend upon this House of Commons to do that for them.
When the act was brought in the then Minister of Trade and Commerce said that the annual statement of the wheat board would be placed before the agricultural committee at each session, but that has not been done for the last three years. Someone may say that we would have a chance to discuss this matter under the estimates. I have before me the estimates for 1951-52 and there is no item in them dealing with the wheat board.
The wheat board is not handling government money; it is handling the growers' money. The wheat board was set up to handle the assets of the farmers of western ' Canada. As a parliament we have the responsibility of seeing that each year the statement of the wheat board is placed before a committee of this house so the officers of the board may be questioned. I am a firm believer in the wheat board and I think the present officers are doing an excellent job. I do not think there is any doubt about the accounting they are giving, but if the wheat board is to function satisfactorily I think each year its statement should be placed before a standing committee of this house, preferably the agricultural committee, so that the growers may feel that there is some responsible section of parliament giving consideration to

these annual statements. I should like the Minister of Trade and Commerce to tell us just why these annual statements have not been placed before the agricultural committee for the last three years.


Clarence Decatur Howe: The annual report of the wheat board was placed before the agricultural committee in 1949. I have said many times, as reports of crown companies are laid on the table of the house, that if any committee was interested in having the reports referred to them I would be delighted to sponsor such reference. I made that offer to the agricultural committee this year but I was informed that the committee did not care to hear the officers of the wheat board.


Percy Ellis Wright: That is hardly a correct statement. That has not been done for the last three sessions. Last year I wrote the chairman of the agricultural committee asking that the committee be called together for the purpose of considering amendments to the Canada Grain Act and I was told that the committee was not going to be called together. If the committee had been called it was my intention to ask that the accounts of the Canadian wheat board be placed before it. Although I was a member of that committee I was refused the right to have the committee called together to consider the Canada Grain Act.


Clarence Decatur Howe: The committee could have been called together to examine the report of the wheat board if that had been the wish of the committee. Evidently it was not. If my hon. friend called their attention to it and the committee did not take action he can hardly blame the minister. I would have been delighted to refer the report to the committee. As a matter of fact, I made inquiry as to when the officers of the wheat board could be present in Ottawa and I gave that information to the chairman of the committee.


Percy Ellis Wright: The committee did not meet although it was requested that they should. I am not blaming the minister for that because it is not his responsibility. It is the responsibility of the government to call a committee when a member asks that it be called.


James Sinclair: I was asked earlier about the St. Lawrence seaway and I have been advised that when the Minister of Transport was piloting through the bill he said that that would be regarded as a crown corporation and therefore would come within section 76 (3) of this bill.


Stanley Howard Knowles: He also gave the undertaking that the necessary order in council would be passed.
Financial Administration


Agar Rodney Adamson: I was interested in the
method of financing that necessary work.


James MacKerras Macdonnell: The question raised by the hon. member for Melfort has been left in a most unsatisfactory position. I do not think it is a very practical answer for the Minister of Trade and Commerce to give when he says that a committee could ask to have a report brought before it if it so desired. There are some crown corporations for which there is no relevant committee. I think the hon. member for Melfont has made a practical suggestion. After all, let us be realistic about this. Committees always have a government majority and do not meet unless the government wishes them to meet. Some practical means should be provided, even though it is nothing more than an undertaking.
These crown corporations are becoming increasingly important, and with the various things that are on people's minds it should not be left to the initiative of somebody, we do not know who, to decide that this shall be done with these reports. In the name of common sense, let us devise some plan. Either the minister or the parliamentary assistant stated that it was a reasonable thing to do. If it is a reasonable thing to do, why not take reasonable means to see that it is done.


James Sinclair: This Financial Administration Act does not provide the means of seeing that it is done. Once a report is tabled in parliament it is in the possession of the House of Commons, not of the government. It is quite true that today the annual reports of the C.N.R., the T.C.A. and the C.B.C. are referred to committees. The Minister of Trade and Commerce has stated that he is more than willing to have the reports of other crown corporations referred to committees.
It has been said that there are some crown corporations which do not come within the ambit of existing committees, but I would point out that the annual reports of all but four of the crown corporations are contained in the public accounts, and even those four will be after this year, and the public accounts committee could consider any which did not fall clearly within the jurisdiction of existing committees.
The hon. member for Melfort has pointed out that for the second time the public accounts committee has recommended that the house should refer these reports to committees when they are tabled, but I repeat that the Financial Administration Act is not an act under which we should consider just how annual reports should be dealt with after presentation to parliament.
2006	HOUSE OF
Financial Administration


James MacKerras Macdonnell: That last
remark is probably justified and I was not suggesting that that be done here and now. What I had hoped tor was some indication that the matter would be pursued. Is the reference of the report of the Canadian National Railways to the committee each year something which must be originated each year or is there some standing arrangement whereby that is done?


James Sinclair: It is my recollection that when the Minister of Transport tables the annual reports of the C.N.R. and T.C.A. he then moves that those reports be referred to the special committee on railways and shipping owned and operated by the government.


James MacKerras Macdonnell: I think that is the complete answer. That is exactly what I was hoping the parliamentary assistant was going to say. Why should that not be done with regard to other reports? Why should they not be referred to the appropriate committee in each case, and if there is no appropriate committee why not adopt the suggestion of the hon. member for Melfort and set up a kind of catch-all committee? As to that last suggestion, perhaps the parliamentary assistant will say that the public accounts committee is the catch-all committee. I am not so sure that is right. I would think that some of these reports might much more reasonably be referred to other committees. Some of them deal particularly with agriculture and they might be referred to the standing committee on agriculture. I understand the hon. member for Melfort would be satisfied if the same procedure were adopted with regard to such reports as that which is adopted with respect to the Canadian National Railways.


Clarence Decatur Howe: I might point out with respect to the complaint of the hon. member for Melfort that he asked that the standing committee on agriculture be called together to amend the Canada Grain Act, which is something quite different. It was not called for that purpose, and he said that if it had been he had intended to ask the committee to call before it the officers of the Canadian wheat board. I suggest that is pretty remote as far as censuring the government is concerned.


Percy Ellis Wright: I must say that at some stage in every session I have asked in speeches I have made that the annual accounts of the Canadian wheat board be referred to the committee on agriculture. I do not think there has been a session in which I have not made that request. I would be very well satisfied if the minister would accept the suggestion and carry out the procedure followed by the government with respect to Canadian National


Railways. When these annual statements of crown corporations are tabled in the house the minister tabling them could refer them to the appropriate committee. I do not think the public accounts committee is the appropriate committee to which all these annual statements should be referred. For instance the report of the agricultural prices support board would naturally go to the committee on agriculture. Then there is the fisheries support board, and I think its report should go to a different committee. Each crown corporation falls naturally within the scope of some standing committee of the house. I do not think they should all be referred to the public accounts committee.
If the public accounts committee carries out its job of examining the public accounts each year it has a pretty full schedule before it. It could handle some of the annual statements but certainly I do not think it should handle them all. I do not think they would fall naturally within their purview. Committees of the house are usually set up having in mind the interest of members in the particular subject with which the committee deals. I think these annual statements when tabled by the ministers should be referred to the appropriate committee. I think the government is quite capable of deciding what is the appropriate committee. I think the same procedure should be followed as in the case of Canadian National Railways. When a report is tabled it should be referred by the minister concerned to some standing committee of the house.


Clarence Decatur Howe: There is a procedure which my hon. friend could always have followed in order to bring any report before any committee he liked provided he was a member of the committee. That procedure was not to make a speech in the House of Commons. The procedure is to call the committee together, make his request to the committee and have the committee request that the matter be referred to it. That procedure was always open to him, and to my knowledge he has never followed it.


Percy Ellis Wright: I beg your pardon. Last year as a member of the standing committee on agriculture I wrote a letter to the chairman, a copy of which I sent to the appropriate committee clerk, asking that the committee be called together for a specific purpose, and my request was refused.


[Stage Direction]
Section agreed to.
On section 77-Auditor General eligible.
James MacKerras Macdonnell: There is one point I wish to raise.


Joseph-Alfred Dion: On 77?


James MacKerras Macdonnell: Yes, I think I can raise it on 77. Perhaps I should have raised it on 76. I have been looking over the directorates of crown corporations and I think there is one comment that should be made. Companies that are carrying on outside business in the ordinary commercial way have a considerable number of outside directors on their boards. That seems sensible to me because businessmen ought to be able to make some contribution from their experience outside. Some crown companies have boards composed exclusively of civil servants. I think in some cases that is perfectly reasonable because where a company is what one might call a purely legal creation for the purpose of carrying out certain decisions of a department then I would not question the board being composed wholly of civil servants. However, in cases where that is not so-and I say this with the utmost deference to civil servants for whom I have high regard-and where the members of the board are expected to bring independent judgment to the decisions that are made, I do not think it is fair to have civil servants as members because unless they are men of outstanding courage, and probably independent income also, it is not fair to expect them to hold a view contrary to that of the minister.
I am not saying this by way of complaint because in most cases I have seen, where companies are carrying on an independent life, they have independent boards. I have not examined them all carefully enough to know exactly where the division comes, but I put that forward because it seems to me to be a sensible principle.


James Sinclair: Once again, this bill has nothing to do with the appointment of directors to the various crown corporations. That is provided for under the various statutes incorporating the corporations. The purpose of this bill is to provide for uniform financial control, audit and report to parliament of the corporations that have already been set up. The observations made by the hon. member would be perfectly in order with respect to any of the crown corporations mentioned so far as their own acts of incorporation are concerned, but they have nothing to do with this financial administration bill.


Major James William Coldwell: Under what audit does the national film board come?


James Sinclair: The national film board is not a body corporate. It is part of a department of government. It would come under schedule A, Department of Resources and Development.


Major James William Coldwell: I asked the question because we have looked into the affairs of the Canadian Broadcasting Corporation on a number
Financial Administration of occasions, and I want to take this opportunity to say that, inasmuch as we have investigated the Canadian Broadcasting Corporation this session, I think provision should be made next session to review the work of the national film board in the same manner. I think members of parliament are not familiar with its work and I think the board should have an opportunity to appear before a parliamentary committee and members of parliament should have an opportunity of going into its operations.


[Stage Direction]
Section agreed to.
Sections 78 and 79 agreed to.
On section 80-Budgets.
James MacKerras Macdonnell: The first subsection refers to "each agency corporation," and the agency corporations are in schedule C which contains Canadian Arsenals Limited, Canadian Commercial Corporation, and so on. The subsection reads:
Each agency corporation shall annually submit to the appropriate minister an operating budget for the next following financial year . . .
Subsection 2 reads:
For each corporation the appropriate minister shall annually lay before parliament the capital budget . . .
As I understand the use of the words "capital budget" it means just what it says, that we are not going to get an operating statement. If I am wrong on that point I will be very glad to be corrected, but if I am right I do not see why under subsection 2 we should not have-if I am using the words as used by the department-both a capital and an operating budget. After all, we are responsible for finding the money to operate.


James Sinclair: I think that question was best answered by the Minister of Trade and Commerce a moment ago. After all, an agency corporation is in effect an agent of one of the departments. But these other corporations, which are set up independent of the operations of any department, may very often, as the member for Greenwood pointed out, have directors who are not civil servants, directors who are chosen from the business life of the country. Some of these businesses are very successful. These corporations should have a certain degree of independence such as they would have if they were private corporations. I believe that the member for Greenwood, who has just made this plea that these corporations should be directed by men with real business training, would be the first to realize that these directors, if asked to prepare an operating budget which is going to be subject to the direction or control of parliament, would

Financial Administration say we might as well be an agency of the government.


James MacKerras Macdonnell: How	does
the parliamentary	assistant read	the word
"corporation" in subsection 2? Does he read that as meaning a proprietary corporation or an agency corporation or does he read it as meaning all crown corporations generally?


James Sinclair: In	section 78 it	says	that
sections 79 to 88 inclusive apply to agency and proprietary corporations. Unless one is specifically mentioned as either type of corporation, it means both agency and proprietary corporations.


James MacKerras Macdonnell: Then	the
distinction which was made is wrong, because the distinction which the parliamentary assistant has just made, if I understood it correctly, was on the basis that this would apply to proprietary corporations.


James Sinclair: That is right, but proprietary corporations were the ones which did not have to submit their operating budgets. Both types of corporation have to submit their capital budgets.


[Stage Direction]
Section agreed to.
On section 81-Bank accounts.
James MacKerras Macdonnell: I should like to set out my understanding of subsection 3 of section 81, and ask the parliamentary assistant if that is his understanding, too. I believe it is a matter of some importance, so I shall read subsection 3:
Notwithstanding the other provisions of this section, where the appropriate minister and the Minister of Finance, with the approval of the governor in council, so direct, a corporation shall pay to the receiver general so much of the money administered by it as the appropriate minister and the Minister of Finance consider to be in excess of the amount required for the purposes of the corporation, and any money so paid may be applied towards the discharge of any obligation of the corporation to His Majesty, or may be applied as revenues of Canada.
What I want to ask is this. Whatever earnings are applied to the revenues of Canada are in aid of the taxpayer. My understanding is, and it is this I want to have confirmed, that in considering the accounts of any such corporation the minister will consider the question of what is capital and what is income according to the normal accounting methods; that is to say, as nearly as possible to what an ordinary, prudent corporation would do, and whatever is prudently regarded as income will be applied to the revenues of Canada.


James Sinclair: That is exactly the situation.
[Mr. Sinclair.!


[Stage Direction]
Section agreed to.
Section 82 agreed to.
On section 83-Awarding of contracts.
Agar Rodney Adamson: This is the section under which contracts are let by the various crown agencies. I gather that under this section there is complete freedom in the method of letting contracts. In other words, one year a crown company may call for open tenders to do a certain amount of work; the next year may appoint the Department of Public Works to do a certain amount of work; the next year may make a private contract without public knowledge at all, for another piece of work. Is my interpretation correct?


James Sinclair: To begin with, so far as proprietary corporations are concerned, they obviously must be given the same freedom as any other private company such as the C.P.R. or the Hudson's Bay Company. So far as an agency corporation is concerned, since they are closer to the government in one sense, they come under the same conditions for contractual commitments as would a department of government. This section 83 would exercise more control over the way in which agency corporations can undertake contracts than has existed before.
So far as the proprietary corporation is concerned, however, it has the same latitude as any private company.


Agar Rodney Adamson: A proprietary corporation such as Eldorado or Polymer may make a private contraot without calling any open tenders or could ask the government to do the work? They are completely free to undertake work without consulting the government or the treasury board in any way?


James Sinclair: Since the hon. member cited Eldorado, I shall put it this way. The directors have exactly the same powers, so far as operating their business is concerned, as would the directors of Hollinger.


James MacKerras Macdonnell: Am I right in thinking Eldorado is a company incorporated under the dominion Companies Act?


James Sinclair: Eldorado is under the dominion Companies Act.


James MacKerras Macdonnell: So there is no regulation of any kind which limits the powers of the directors under the dominion Companies Act. There is nothing as between them and the department or between them and the minister; they are literally just as free as if they were the directors of a private company.


James Sinclair: There is the same judgment exercised by the directors of a private company as by the directors of a proprietary corporation as to the use they can make of the powers given to them. Both of them are anxious to make the greatest possible success of their operation.


Agar Rodney Adamson: This applies to Central
Mortgage and Housing as well? They have the right, without calling public tenders, to undertake a housing project? They could do that under this section?


James Sinclair: But obviously Central Mortgage and Housing are under scrutiny by parliament, and they are going to conduct their affairs in the very best and most businesslike way.


Agar Rodney Adamson: I am not contesting that argument at all. I am just saying that this machinery allows them to undertake, without calling public tenders, the work that they require to have done.


James Sinclair: They have the same powers as would any other private corporation incorporated under the dominion Companies Act.


James MacKerras Macdonnell: I do not
propose to take any more of the time of the committee on this, but I do not wish my silence to indicate I am convinced.


[Stage Direction]
Section agreed to.
Sections 84 to 88 inclusive agreed to.
On section 89-Notice to persons failing to pay over public, money.
James MacKerras Macdonnell: I just wish to make one comment here which might be of interest to the committee. When this bill was before the public accounts committee I asked a question as to whether government officials were bonded or whether the risk was carried inside the four corners of the government operation. We were told it was carried within the government operation. The reason I have risen to my feet is that we were given figures showing the small amount lost in all the years, and they were astonishing. If the parliamentary assistant has those figures, will he give them to the committee?


James Sinclair: I am gratified by the hon. member's suggestion, because it is an indication of the high calibre of our civil servants. There is one section, section 98, which spells it out specifically. When we reach that section I shall put on the record the losses over the last few years.


[Stage Direction]
Section agreed to.
Sections 90 to 94 inclusive agreed to.
Financial Administration
On section 95'-Debts due to crown.
Percy Ellis Wright: I do not want to repeat the argument which I made on section 36 and which the parliamentary assistant to the minister stated should be made under section 95. He indicated that he would answer me on section 95.


James Sinclair: As far as seed grain debts are concerned, I find that they are covered by a separate statute, an act respecting certain debts due to the crown, assented to in April, 1927. That is the statute under which the adjustments to which the hon. member referred have been made. This statute still is the governing statute as far as these particular types of debts are concerned. There is therefore no change in the practice.


Percy Ellis Wright: There is a change in the practice. I understand that under that statute the assets of the applicant are taken into consideration in determining the amount that he should pay on his debt. He will now have an added asset, under the Old Age Security Act, as a result of the payment of so much each month. If I understand the act correctly, that will be included in his assets and will be taken into consideration.


James Sinclair: It is scarcely an asset in the ordinary way of describing an asset. It is a future income. Even if the same recipient had come due a private annuity which brought him $40 a month for a period of time, that would not be regarded as an asset but would be regarded as current income. If that type of thing was in the past regarded as coming within the scope of this debt adjustment act, then probably the old age pension payments are too. I can find out definitely for the hon. member and give him a written statement on it.


Percy Ellis Wright: Does the parliamentary assistant to the minister not consider that these payments made under the Family Allowances Act, the Old Age Assistance Act, the Old Age Security Act and under the Pension Act where they are paid on compassionate grounds or to dependents of veterans, are in a special class and that they should not be attached under this section of the act for debts owed to the crown?


James Sinclair: As to debts owed to the crown, it is quite easy to say that there should be no attachments. But there is another person who should be considered and that is the taxpayer, the man who has put up the money for all government payments. If an overpayment of crown money has been made to an individual, then I think most of the taxpayers of this country would think that

Financial Administration there should be some right of recovery out of other payments made to that person from the consolidated revenue fund. As to the actual practice, it is unlikely that the mother receiving family allowance is going to have any substantial debt due to the crown on which recovery is going to be attempted. I think it is almost as unlikely that there will be many persons at age 70 who will owe substantial debts to the crown. If they have been overpaid through old age pension payments or disability pension payments and things like that, I think that most of the taxpayers of Canada, knowing that these people had obtained too much money out of public funds, would expect the treasury of Canada to try to recover those overpayments out of future payments from the treasury of Canada.


Percy Ellis Wright: I agree with the minister where the overpayment has been as a result of the particular act under which the pension or allowance is being paid. But where it is a debt that has no connection with that act, where it is a debt that has been acquired perhaps fifteen or twenty years previously, and is a debt that is still owing to the crown, I do not think that it should become attachable under this section.
I agree with the parliamentary assistant to the minister that where false statements have been made or where overpayments have been made-even by mistake-to the recipients of the particular pension in question, they should be recoverable; but as to debts that may have been owed to the crown twenty or thirty years previously and are still owing because of the inability of the debtor to meet those debts, when eventually he comes to the age of 70 years and becomes eligible for the old age pension, this provision allows the crown to collect those debts; in fact, it makes it almost compulsory for the crown to do so. I think that the parliamentary assistant to the minister will find that there will be a good many cases where debts have been owed to the crown for a number of years and where now there will be an asset on which the crown can collect. Outside of something that has to do with the act itself, I do not think that these pensions under the Old Age Assistance Act, the Old Age Security Act, the Family Allowances Act

or the Pension Act in connection with pensions to dependents or parents on compassionate grounds, should be attachable for old debts that had no connection whatsoever with the act itself. I think that the Old Age Security Act, the Old Age Assistance Act, the Family Allowances Act and the acts covering pensions paid to dependents of veterans and those paid on compassionate grounds under the Pension Act, should be amended to provide that the pension would not be attachable for those ancient debts that might have been acquired toy the citizen during a former period.


[Stage Direction]
Section agreed to.
Sections 96 to 102 inclusive agreed tc.
On section 24-No payment out of C.R.F. without authority from parliament.
Agar Rodney Adamson: Mr. Chairman, the questions I wanted to ask on section 24 I have asked subsequently on section 63, and they concern the repayment of the funded debt. I therefore have no further objection to section 24 carrying.


[Stage Direction]
Section agreed to.
Schedules A, B, C, D and E agreed to.
On the title.
Mr. Blackmore:: Was not the assistant to the minister going to put a statement on the record that was of interest?


James Sinclair: Yes. I have here a statement of the government officers guarantee fund showing the premiums, interest added, total credits, net payments from fund on defalcations and closing balance. As the hon. member for Greenwood says, in view of the large amounts of money which are handled by the civil service of Canada, I think it is quite a tribute to their efficiency and honesty that the loss should be so small. It is a tribute not only to the honesty of the civil service but also, I suggest, to the extremely effective internal audits and other treasury controls over the public moneys that we have all across Canada. I think it would be of interest to have this statement put on the record.


Joseph-Alfred Dion: Is it agreed that the statement be put on the record?


Some hon. Members:: Agreed.


James Sinclair: 
James MacKerras Macdonnell: I should like to add a word to what the parliamentary assistant has said. At a time when there seem to be places where the standard is not quite so high, I think we can congratulate ourselves and remind ourselves that, whatever our differences are, we have no difference in feeling that the civil service is a fine organization and that it belongs to us all.


James Sinclair: I had rather anticipated that because of current developments elsewhere a question would be asked somewhere along the route with regard to our audit of tax funds, and that is why I am so particularly pleased that we should have this on the record. I think it is a tribute to our British parliamentary system. It is a tribute not only to the high quality of our civil service and to the efficiency of the internal audit of the treasury board but to this great institution we have in our parliamentary system, namely the office of the Auditor General, reporting direct to the House of Commons.


Agar Rodney Adamson: I have not seen that statement. Have there been any cases at all of persons taking bribes?


James Sinclair: This statement does not refer quite to that matter, but to misappropriation of public funds. However, the same remarks can be applied to tax collections. Across the years I think every member of parliament has heard of an occasional instance of that. For example, I know the hon. member for Vancouver-Quadra and I, in our own home
town, remember a prosecution launched by the Royal Canadian Mounted Police, in Vancouver last year, in the case of one junior official attempting to extort money from a taxpayer. The thing that I think pleased the people at home was how quickly that attempt was discovered-even by the junior official-because of the system of checks within the national revenue department itself, the checks that treasury board has, the financial control of the finance department and then finally the exercise of the audit by the office of the Auditor General. Attempts to do these things are occasionally tried in very small amounts, but are always detected. Each year there may be one or two instances across Canada where an attempt is made to do something along that line. The great tribute to the service is how extremely rare such attempts are, and how quickly they are caught up with, when attempted. The people of Canada have good reason to be proud of the honesty and efficiency of our tax offices. And the other thing is the remarkable record as far as the civil servants are concerned who are handling the very large amounts of money which the treasury of Canada does handle.


Stanley Howard Knowles: Yes, and it is a tribute to the kind of employees we have in the civil service that there have been so few attempts.


Agar Rodney Adamson: I want to join with the parliamentary assistant and say how pleased I am as a Canadian and as a member of this

Toronto Harbour Commission house at the extremely high standard of probity and honesty of all levels of the civil service of Canada.
Bill reported, read the third time and passed.



BUSINESS OF THE HOUSE

Alphonse Fournier: Before proceeding with the next bill, Mr. Speaker, I should like to move concurrence in the Senate amendments to the Railway Act and to the Toronto Harbour Commissioners Act. They are on page 5 of today's order paper and on page 317 of the Votes and Proceedings of Friday, December 14.


Howard Charles Green: Will the Minister of Public Works, or the parliamentary assistant to the Minister of Transport, explain them?


Alphonse Fournier: I will explain them as soon as the order is called.



RAILWAY ACT


Alphonse Fournier: the second reading of and concurrence in amendments made by the Senate to Bill No. 12, to amend the Railway Act.
He said: The first amendment is on page 4 of Bill No. 12, lines 26 to 29, and reads as follows:
Delete paragraph (b) and substitute the following:
"(b) may, in addition, specify class rates between specified points on the railway and when rates are established in groups the rates to or from individual points in the groups may be higher or lower than the rates specified under paragraph (a)."
The amendment reads:
may, in addition, specify class rates between points on the railway-
And here are the words:
and when rates are established in groups the rates to or from individual points in the groups . . .
That is satisfactory to the government. The next amendment is on page 5, line 22, and reads:
After "competition" delete "actually."
The next amendment is on page 8, line 36, and reads as follows:
After "act" insert "except section three hundred and thirty-two A."
The government is satisfied, and I move the amendments.


[Stage Direction]
Motion agreed to, amendments read the second time and concurred in.


Alphonse Fournier: the second reading of and concurrence in amendments made by the Senate to Bill No. 9, to amend the Toronto Harbour Commissioners Act.


Agar Rodney Adamson: What are the amendments?


Alphonse Fournier: On page 1 of Bill No. 9 at line 19, after the word "act", insert the words "to control and regulate".


Agar Rodney Adamson: Section 3?


Alphonse Fournier: Paragraph (c) of subsection 1 of section 3. The second amendment is on page 1, line 24, and reads as follows:
Delete the words "in the opinion of the commissioners" and substitute therefor the word "adversely."
The third amendment is as follows: On page 2, lines 8 to 16, delete subclause 3 and substitute therefor the following:
(3) Section twenty-one of the said act is further amended by adding thereto immediately following paragraph (g) the following as paragraph (gg):
(gg) When any person, carrying on business for the purpose of processing and/or distributing bulk petroleum products upon and from lands now or hereafter used for such purpose within the port and harbour of Toronto, has been receiving such bulk petroleum products by water into the said port and harbour for such purposes, shall hereafter receive such bulk petroleum products in the said port and harbour through or by means of any pipeline, the corporation may impose upon any such person or upon any other person using such lands for the purpose of processing and distributing bulk petroleum products within the area of the said port and harbour, an annual charge not exceeding the amount of the harbour dues received by the corporation in respect of transportation of bulk petroleum products by water by such person into the said port and harbour during the whole of the calendar year immediately preceding the calendar year in which alternative transportation by pipeline shall commence, as a compensation to the corporation in whole or in part for the annual loss of revenue sustained by the corporation by reason of the substitution of transportation by pipeline into the said port and harbour for transportation by water as aforesaid: Provided, however, that-
(i)	the period in respect of which the corporation may impose any such annual charge shall expire on December 31, 1961;
(ii)	the annual revenue received by the corporation from any such person for transportation of petroleum products into and out of the said port and harbour by water shall be applied as a credit against any such annual charge;
(iii)	if any person shall cease to carry on the business of receiving and/or distributing bulk petroleum products in the said port and harbour for such purposes through or by means of a pipeline, then the said annual charge imposed upon any such person shall cease; and

(iv)	the corporation may without by-law enter into agreements with any person or persons ior the purpose of fixing and collecting compensation in lieu of imposing such annual charge by by-law;


Agar Rodney Adamson: I was in the committee when this took place and I took exception to the passing of this bill by the commons committee.


Alphonse Fournier: That is probably why the Senate amended it.


Agar Rodney Adamson: At last the Senate has justified its existence.


Alphonse Fournier: The hon. member for York West seems to agree to the substance of this amendment, and the government sees no objection to it.


Howard Charles Green: May I ask a question? Is it a fact that these amendments are the result of an agreement between the Toronto harbour commission and the people who were opposing the bill?


Alphonse Fournier: And the city.


Howard Charles Green: Between the commission and those in opposition to the bill. I understand that that is why these amendments are in this shape.


William Moore Benidickson: Mr. Speaker, to an extent that can be said, but I think I should qualify that by saying that the amendment comes before us because the Toronto harbour commission and the representatives of the people who might have objected to the rates sensed the feeling of the Senate committee, and as a result collaborated in this amendment.


Agar Rodney Adamson: When the bill was first introduced the then council of the city of Toronto had not made up their minds what they really wanted in this bill. Eventually they did, and I think these amendments are good and should be adopted.


Alphonse Fournier: The fourth amendment is found on page 2, line 35, and reads: After the word "transshipped" insert the words "by water". The last amendment is found on page 2 and reads: Immediately after line 42 add the following subclause:
(7) Section twenty-one of the said act is further amended by adding thereto the following subsection:
(5) No rate, toll or charge made under this act shall be construed as applying to trucks or other vehicular traffic duly licensed by competent authority or to the contents thereof.


[Stage Direction]
Motion agreed to, amendments read the second time and concurred in.


Alphonse Fournier: the second reading of Bill No. 26, to amend the Public Works Act.
Public Works Act


Howard Charles Green: Is the minister going to make a statement on this?


Alphonse Fournier: A very short statement. It is a short bill. The government has brought in this bill to reaffirm our faith in the tenders system for public works.


Some hon. Members:: Oh, oh.


Stanley Howard Knowles: That ain't the way I heared it.


Mr. Hees:: That is not the way I read it.


Gordon Graydon: Is the government wavering?


Alphonse Fournier: No, I have studied what took place in Sir John A. Macdonald's government. I did not know whether I should base our policy on that of Sir John A. Macdonald-


Gordon Graydon: If you kept on reading it it would help you a lot.


Alphonse Fournier: Here is what the new bill says:
Where a work is to be executed under the direction of a department of the government, the minister having charge of that department shall invite tenders by public advertisement for the execution of the work.
As we find in every general statute of law, there are some exceptions.


Stanley Howard Knowles: Hear, hear.


Alphonse Fournier: But the exceptions should not overshadow the great principle of asking for tenders.


Stanley Howard Knowles: That is right, they should not.


Alphonse Fournier: And they will not while I am Minister of Public Works. Here are the exceptions:
(a)	the work is one of pressing emergency in which the delay would be injurious to the public interest,
(b)	the work can be more expeditiously and economically executed by the employees of the department concerned; or-
Subsection Cc) refers to limited contracts where the minister could use his own judgment to an amount of $5,000. That dates back to 1886. At that time $5,000 was a large sum. Today people say it is not quite so valuable, that is why we propose-


Stanley Howard Knowles: A new ceiling?


Alphonse Fournier: No, I am proposing that I get further under the controls of treasury board and the governor in council. The bill contains these words:
-the minister is satisfied that the nature of the work renders a call for tenders by public advertisement impracticable-
And those who have had any experience in construction work will understand that word. And it continues:
-and that the public interest can best be served by entering into a contract for the execution thereof without inviting such tenders.

Public Works Act
May we consider the whole section 'and the subsections? The whole section gives hon. members a clear picture that we ask for tenders, and that when we meet circumstances where tenders are impracticable-and, may I say, I could give examples, especially in this city of Ottawa, and very close to it-


Howard Charles Green: The Prime Minister's house?


Alphonse Fournier: Well, if you wish. And the east block, if you wish-and certain other buildings which were put up about seventy years ago, and that we have to keep in repair. We found out that we had to stretch the language-because, as the hon. member for Vancouver-Quadra (Mr. Green), who is a lawyer, will tell you, you can put an interpretation on nearly every statute, if you wish. He will tell you that lawyers do that every day. We had to use our best judgment under subsections (a) and (b), approved by treasury board, to proceed with these works. But, being an admirer of the tenders system, I thought that this was the time when we should-


Howard Charles Green: Do away with it?


Alphonse Fournier: -allow the minister a subsection which would be clear enough to justify his decisions, and get the approval of hon. members of this house.


George Harris Hees: What an explanation! Wow!


Gordon Graydon: Now, Howard, what can you do with that one?


Howard Charles Green: 


Mr.   Speaker-Mr. Macdonnell@Greenwood: Sharpen your teeth now, Howard.


George Harris Hees: File them, Howard.


Howard Charles Green: My first remark must be one of congratulation to the minister upon the interesting exposition he has made of this bill. I am sure that -seldom have members of the House of Commons heard a bill explained with such humour.
It was also gratifying to hear the minister say that the government, at last, is trying to reaffirm its faith in the tenders system.


Stanley Howard Knowles: Pretty tender faith.


Howard Charles Green: There is no doubt that-


James MacKerras Macdonnell: "Reaffirm" is good, too.


Howard Charles Green: -the time has come for reaffirmation. But unfortunately this bill does not carry out all the hopes and promises contained in the remarks of the minister.
We of the official opposition feel that this hill is thoroughly bad, and should be defeated.


James MacKerras Macdonnell: Can't you put it stronger than that?


Howard Charles Green: Listening to the minister, one would think that this was an innocuous little bill which would further the cause of good government in Canada. But what it does, in fact, is to open the gates to no-tender contracts. It removes from the Public Works Act the ceiling placed there by parliament, the restriction parliament has placed on this pnocedure of awarding contracts without tenders.
I would ask hon. members to look at section 36 as it now stands. It begins in this way:
Whenever any works are to be executed under the direction of any department of the government-
And I point out that the section covers "any" department; not only the Department of Public Works.
-the minister having charge of such department-
So that this section applies to all the ministers. It is not restricted to the Department of Public Works or to the Minister of Public Works.
-shall invite tenders by public advertisement for the execution of such works, except in the cases-
And then the section goes on to list the exceptions. The important part of section 36, as it stands without the suggested amendment, is the part I have just read; because it lays down the rule that tenders must be called for any public work.
Then, to go on to the exceptions; at the present time the first exception is where there is:
-pressing emergency in which delay would be injurious to the public interest.
No one could quarrel with that exception, and it will be in the new section as set out in the bill. Then the second exception refers to cases:
-in which from the nature of the work it can be more expeditiously and economically executed by the officers and servants of the department.
Your Honour will notice that that exception refers only to the case where the particular department concerned has officers or employees who can do the work better than it could be done by having it let out by contract. There again, no one can quarrel with that exception.
In his explanation of the bill the Minister of Public Works has pointed out that these two exceptions are cramping his style. He says they have to be stretched a bit in order to let these contracts without tenders, and that therefore the time has come to give him more elbow room with regard to no-tender

contracts. So he takes out the third exception which reads as follows:
Where the estimated cost of the work is less than five thousand dollars and it appears to the minister, in view of the nature of the work, that it is not advisable to invite tenders.
That provision is being removed entirely. In some other bills-and I think particularly of the National Harbours Board Act-there is a provision for a figure of $10,000 instead of $5,000. I do not believe anyone would have very much objection to the insertion of a figure higher than $5,000. But the weakness of this bill is that it takes out any ceiling at all.
What does it do? In place of the ceiling it gives the minister of the department concerned wide-open powers reading as follows:
Where the minister is satisfied that the nature of the work renders a call for tenders by public advertisement impracticable and that the public interest can best be served by entering into a contract for the execution thereof without inviting such tenders.
That new subsection takes the ceiling out of the Public Works Act and says, in effect, that any minister whose department is to construct works can, if he so wishes, let contracts without tenders. That, we believe, is a very serious change.
The minister suggested-I noticed he was smiling at the time-that the government believes in the principle of asking for tenders. Yet under this new subsection the system of asking for tenders is just being thrown out the back window.
Subsection 2 of section 36 of the Public Works Act as it stands on the statute books today reads:
Whenever in case of any work tenders are required to be, or are invited, the minister having charge of the department concerned shall submit all tenders received therefor to the governor in council and the contract for the work shall be awarded under the direction of the governor in council.
That means that wherever tenders are called the contract must have the approval of the governor in council. That salutary provision is also being taken out of the act.
It may be said that the whole situation is being taken care of by section 39 of the Financial Administration Act just passed which provides that the governor in council, which of course is the cabinet, may-they are not compelled to do-make regulations setting a ceiling on contracts over which tenders must be called. It must be remembered that section is merely permissive, and that the treasury board as well as the cabinet are given power to approve any contract even though tenders are not called.
In his explanation the minister said this bill was all right because he was being put further under the control of the governor in
Public Works Act
council and the treasury board than he had ever been before. We would like to see him a little bit under the control of parliament, and I am referring not only to the Minister of Public Works but to the ministers of all other departments which let contracts. Parliament should not be deprived of the right under the Public Works Act to put on a ceiling over which no contract can be let other than by tender.
The Public Works Act is the master act covering public works of all kinds. As I pointed out, the section applies to all departments. There have been similar restrictions imposed from time to time, even in the Defence Production Act which was passed at the last session. Under that act limitations were imposed on the Minister of Defence Production, and believe me when the government can impose any limitation on him there must be a good case made out. Also it must be remembered that he is dealing with defence works for which there is far more justification for not following the tender system. Section 17 of that act provides:
(e) a contract may be entered into by the minister without the approval of the governor in council if
(i)	in the opinion of the minister, the contract must be entered into immediately in the interests of defence,
(ii)	the estimated expenditure, loan or guarantee does not exceed twenty-five thousand dollars, or
(iii)	competitive tenders have been obtained and the lowest tender, involving an estimated expenditure not exceeding fifty thousand dollars, is accepted,
but the minister shall make a report to the governor in council in respect of any contract involving an estimated expenditure, loan or guarantee exceeding ten thousand dollars and entered into without the approval of the governor in council.
In all other cases under that act the minister must have the prior approval of the cabinet.
I propose to illustrate our objection to this bill by referring to what happened in connection with the Alvin building in Vancouver, about which the Minister of Public Works has heard on more than one occasion. The department decided that they wanted an office building in Vancouver. Friends of the government, and I repeat that, obtained some land and built a building. I believe they were assisted in financing that building by the fact that they had an agreement with the government. They had their own contracting company. Without calling for tenders the government made a deal with these people. Order in council P.C. 1382, of April 6, 1948, passed on the recommendation of the Minister of Public Works and with his report before them dated March 27, 1948, sets out that an offer had been obtained from Alvin Estates

Public Works Act
Limited

which incidentally was not incorporated until a week or so after the order in council had been passed-to construct a fireproof building on their property and to rent it to the crown under certain terms and conditions which also were set out.
The order in council explained that the crown was to pay a certain rental per year commencing with the date of occupation and was given the option to purchase the property at any time within the first twelve months of occupation for a certain price. About a year later order in council P.C. 563, dated February 8, 1949, was passed, again on a report from the Minister of Public Works. It set out that more floors and fixtures had been added to the building and established that the rental was to go up to $183,995 per year; and that the purchase price, if the government exercised its option, would be $1,063,105. That fall of 1949 I asked the minister about this Alvin building because it was becoming the talk of the town in Vancouver.
In the following session we had a debate on the whole question which took place on March 2,	1950. The minister was very
emphatic about the actions that had been taken by his department. He tried to justify not calling for tenders on the deal, and there the matter ended for the time being. About a month after the debate the government exercised the option. The amount paid to these people in rent was $215,988.34, and the government paid $1,066,614.90 for the property, a total of $1,282,603.24.
The minister's defence of this deal was in the first place that there was an emergency and therefore under this emergency clause (a) of section 36 of the Public Works Act he was entitled to make the deal without calling for tenders. Another defence which he made with considerable skill was that shortly before the debate he had obtained valuations from two prominent contractors in eastern Canada, which showed that the price was a reasonable one. Subsequently as a result of the debate, and before the government exercised the option, he obtained two further valuations, this time from two Vancouver firms, and in due course the property was purchased.
On June 21, 1950 I moved for a copy of any and all valuations which had been obtained by the government on the Alvin building in Vancouver. That return had not been brought down by the time the session prorogued, but in July of 1950 I received a letter from the deputy minister of public works containing a list of figures. There were no details. The actual letters containing the valuations were not given me but simply the

figures, and they ran all the way from $950,500 to $1,097,478. I wrote to the deputy minister pointing out that what I wanted was a copy of the valuations, but I never received them. During the present session the leader of the opposition (Mr. Drew) demanded the tabling of a half dozen returns which had been held back for a long period of time, and one of them was the motion for these valuations.
On November 16 the Minister of Public Works (Mr. Fournier) did bring down a return but again it merely contained the same figures. It did not contain the valuations letters. Then I pressed him for the actual copies of the valuations, he said he would get them, but he issued a warning. As found at page 1131 of Hansard he said:
I shall do my best to give particulars of that. Perhaps I can also bring in the fact that this building is now worth nearly $2 million.
The return did come down on December 4 and it contained all the valuations. It also contained a valuation which the minister had made last month in an attempt, of course, to show that the building would have cost more if it had been built now.
These valuations merit a little consideration. Two of them were obtained from large eastern firms a few weeks before the debate took place in the house. One was from the firm of W. H. Bosley and Company of Toronto. When the debate took place in March of last year the minister pointed out what a wonderful firm this was, and how Mr. Bosley had made a personal inspection of the building and had said that the deal was a good one. Here is what Mr. Bosley actually had to say in his letter of February 13, 1950. It starts out by saying:
This property is said to have a frontage on Robson street of 99 feet by a depth of 124 feet . . .
It goes on to refer to the building and then says:	-
The crown is at the moment under contract to lease these premises for a period of ten years from the 17th of March, 1949, paying annually therefor a rental of $183,995 in equal monthly instalments at the end of each and every month. The lessor is to pay taxes, major repairs and insurance.
This lease contains an option permitting the crown to purchase the demised premises at any time during the first year of the lease for the sum of $1,063,105. My analysis of this situation indicates that the present worth of nine years rental yet to be paid from the 17th of March next, discounted, after deducting the amount for taxes, repairs and insurance, will yield the owners an amount equal to or better than the option price.
Of course if the government had gone on renting it would have yielded the owners

several hundred thousands of dollars more. Mr. Bosley concludes by saying:
In my judgment it is in the crown's interest to exercise the option as before [DOT] mentioned, and become the owners of this property.
Any child in elementary school could have decided that just by looking at the figures, and Mr. Bosley certainly did not say that the building was good value at the price which was paid for it. The other eastern firm upon which the minister relied in his reply to me in March of last year was E.G.M. Cape and Company of Montreal. Their letter of February 24, 1950, reads as follows:
Re: Alvin estate building, Vancouver, B.C. Dear Sir:
We estimate the cost of the above mentioned building, according to plans, etc., to be nine hundred and six thousand dollars ($906,000) all as per the attached breakdown.
The letter has attached to it a breakdown showing how they arrive at the figure of $906,000, which is nearly $160,000 lower than the government paid.


Mr. Gibson:: Was the property included in that?


Howard Charles Green: No. Attached to the return are figures to show how the department dealt with the valuation given by E.G.M. Cape and Company. First of all they added to the $906,000 professional and inspection fees of $36,985, which I submit had nothing to do with the valuation of the building. Then they added $40,000 for the land, and I do not quarrel with that. That would put the value of the building and the land at $946,000. Then they added legal and financing fees of $31,860, and they added to that 5 per cent profit to the Alvin Estates Limited, $50,740, with the result that they brought the E.G.M. Cape and Company total up to $1,065,585, which is about $2,000 more than the government paid. But in order to get it up to that figure they padded it to the extent of about $119,000 by these additional charges for professional and inspection fees, legal and financing fees and 5 per cent profit to the Alvin Estates Limited, the owners of the building.


Douglas Scott Harkness: That is what is known as conjuring.


Mr. Nowlan:: No wonder there was a reaffirmation.


Howard Charles Green: This was one of the valuations which was obtained a few weeks before the debate took place in the house. Now let us turn to the valuations which were obtained a few weeks after the debate took place, and before the government exercised its option. One is from a very reliable firm of architects in Vancouver known as McCarter and Nairne. Their valuation is dated March 10,
Public Works Act
1950, and addressed to the deputy minister of public works. It is headed "Re Alvin Building, Vancouver, B.C.", and reads:
We are enclosing two copies of recapitulation of our detailed estimate of the cost of the Alvin building, Vancouver, B.C. This estimate does not include architects or engineering fees or the land, but deals only with the building estimate.
Then they set out the estimate in detail, and they show a total figure of $880,440.
Again to that valuation the Department of Public Works has added a memo showing additional figures as follows: Professional and inspection fees, $35,775; Land, $40,000, with which again I am not quarreling; legal and financing fees, $31,087, and profit of 5 per cent to the Alvin Estates Limited, $49,365. In that case they could not bring the total up to the amount that was paid. They only brought it up to $1,036,667. In my opinion that valuation has been padded by the department to the tune of about $115,000.
There is another valuation from a reliable firm in Vancouver which was obtained after the debate and just before the government exercised its option. It is from the Northern Construction Company and J. W. Stewart Limited, a thoroughly responsible contracting firm. The letter from the president of that firm, dated March 13, 1950, addressed to the deputy minister reads:
Pursuant to your request and from the plans and information furnished us by your Mr. A. K. Mills, together with the personal inspections of the building, we have compiled price on the Alvin building on Robson street in Vancouver, on the basis that we would submit a tender for its construction today. This price amounts to $920,300, and includes the total structure together with a clearance of the site which involved the removal of old buildings which formerly occupied it.
Trusting this gives you the information you require . . .
To that return the department has again added a memo bringing this figure up to the figure which they gave me last summer. They added $40,000 for the land, to which I do not object; professional and inspection fees of $38,143; legal and financing fee of $32,314 and profit to the Alvin Estates Limited of $51,523, bringing the total to $1,082,280. They have again padded the valuation which was turned in by their own valuator.
This is not the whole story, because there are also three valuations in this return which were made in the year 1949 about one year before the debate took place in 1950. One of them is by the resident architect in British Columbia, a Mr. Dawson, and it is dated March 21, 1949. He shows a valuation of $915,815. To that of course must be added the land value of $40,000. With this valuation the department includes a memo padding

Public Works Act
it again by the same three items to bring it up to $1,077,550, which was the figure given to me last summer.
There is one valuation in 1949, March 18, by another reliable architect, William Frederick Gardiner, who has since died. It shows a valuation, including land, of $950,000. On the return which I received there is this note about Mr. Gardiner's valuation, which is the only one included in the first return at the figure which was given by the evaluator:
Gardiner in his valuation provides no details and is definitely low.
Actually, Mr. Gardiner's figures are practically the same as all the figures I have just quoted.
In 1949 there was one other valuation which was higher, and that was by a firm known as Hugh M. Fraser and Company Limited, signed by H. Forrester. Mr. Howard Forrester is a former Liberal member of the provincial legislature, but I am not quarrelling with Mr. Forrester; he is a good citizen. He has placed a valuation on the Alvin building at $1,097,478.67, but he puts it on a cubic foot basis. He does not break down the cost as was done in all the other cases.


Mr. Low:: Including the land?


Howard Charles Green: Yes. Mr. Forrester's firm rents three postal stations to the government on a similar basis.
Then I should like to say a word or two about a valuation which the minister obtained last month. It was made by the new district architect, Mr. L. S. W. Wells. Mr. Wells sets out the details of the present cost of this building, and they amount to $1,124,676. Then he adds these words, "average increase of 25 per cent"-that is over the figures of two years ago. His letter ends with this paragraph:
You will note the average increase amounts to approximately 25 per cent which is considered conservative.
Now, taking account of that 25 per cent, we find Mr. Wells' figures for the old building two years ago would have been about $900,000. From all of these people except Mr. Forrester, therefore, we reach a valuation, including land, varying from $920,000 to $960,000. Yet the government paid over $1,060,000 and apparently was proud of doing so. Was that the figure?


Alphonse Fournier: It was $1,063,000.


Howard Charles Green: No. They paid $1,066,614 and some odd cents, plus the rental of $215,988.34. There was considerable uproar about this deal in Vancouver. There were other transactions with the same contracting firm that built

this building, the principals of whom owned this Alvin Estates Limited, and things got fairly hot. For example a year ago, on April 5, 1950, a statement by the Minister of Fisheries is quoted in the Vancouver press under the heading: "No More 'No-Tender' Building Deals".


Gordon Graydon: There is reaffirmation.


Howard Charles Green: This is another reaffirmation. The subheading reads: "Mayhew Forecasts Change in Government Accommodation Procedure" and he is quoted as saying:
The no-tender policy was used in wartime when contractors wouldn't give a firm price. They couldn't.
That period is gone by. I don't think we'll see any more of that. Government policy has always been by tender.
All we are 'asking is that the government keep this policy of tender and drop foolish bills of the kind' now before the house. If this bill goes through the minister is free to make a deal of this sort. He could not be questioned if he made another deal of this kind, nor could any other minister; because the only restriction on him will be that he must be satisfied1 in his own mind. Obviously he was satisfied' with this deal last year, and' I presume he is still satisfied.


Alphonse Fournier: Oh, yes; and I can tell you why.


Howard Charles Green: Yes? The wording of the
paragraph is:
(c) the minister is satisfied that the nature of the work renders a call for tenders by public advertisement impracticable and that the public interest can best be served by entering into a contract for the execution thereof without inviting such tenders.
We believe that the tender system is of greater importance to Canada now than it has ever been; in the first place because it is one of our main methods of keeping down government expense and, of course, the keeping down of government expense is or should be one of the prime policies in meeting the inflationary conditions which exist today. Second, we believe this tender system is of vital importance now because this is the day of the great surplus, when the cabinet have millions of dollars in their collective pockets just burning a hole. They do not want to be caught with a large surplus at the end of a fiscal year.


Stanley Howard Knowles: That is what makes them
feel so tender.


Howard Charles Green: That is too good for me. There is greater need than ever before. When the government is dragging in money in far larger amounts than is necessary, there is greater need for retaining and strengthening this tender system rather than opening the door to no-tender contracts. Mr. Speaker, I

am afraid1 this change is merely another symptom of the cabinet disease which caused1 the Minister of Trade and Commerce (Mr. Howe) a year or two ago to say: "Oh, what's a million dollars?"


Mr. Lennard:: And also: "Who will stop
us now?"


Howard Charles Green: Yes. At the last session he
said: "If we wanted to get away with it, who would stop us?" We in the official opposition do not believe there should be any relaxation in the provision that public works must be constructed on a tender basis. We believe that retaining the tender system and, in fact, strengthening it is in the public interest, and that it should be a basic principle in conducting government business that tenders will be called for in the construction of government works.


Major James William Coldwell: Mr. Speaker, I am bound to say that we support the viewpoint put forward1 by the hon. member for Vancouver-Quadra (Mr. Green). No matter how much confidence we may have in a minister of the government-and I have no reason to have anything but confidence in the present Minister of Public Works (Mr. Fournier)-I think we should not pass this bill. As the hon. member for Vancouver-Quadra has properly pointed out, the only safeguard' this house has that contracts will be let in a proper manner is the provision that tenders will be called. As to this departure, I cannot recollect a similar instance during my term in the House of Commons. If the house permits this bill to pass, I think we shall be doing something the house will regret and maybe, in the years to come, a minister or a government may regret. I therefore say I think the house should refuse to pass this bill.
I have no doubt it will be pointed out, as the hon. member pointed out, that in section 39 of Bill No. 25 which we were discussing an hour or so ago there is a clause which seems to mitigate the provisions of this bill. Section 39 of Bill No. 25 reads:
The governor in council may make regulations with respect to the conditions under which contracts may be entered into and, notwithstanding any other act,
(a)	may direct that no contract by the terms of which payments are required in excess of such amount or amounts as the governor in council may prescribe shall be entered into or have any force or effect unless entry into the contract has been approved by the governor in council or the treasury board, and
(b)	may make regulations with respect to the security to be given to and in the name of His Majesty to secure the due performance of contracts.
I would point out, Mr. Speaker, that this is permissive legislation. This is a permissive clause; it is not mandatory. It does not say that the government "shall direct". The word
Public Works Act
"shall" is not used. We have the word "may". "Shall" is mandatory; "may" is merely permissive.
In the second place, I do not think the house would be wise to rely on section 39 of Bill No. 25, because we do not know what the regulations will be, and regulations may be amended, varied or rescinded by the governor in council. The only safeguard we have is that the safeguards we want shall be written into a statute. Here we find that the old section 36 of the Public Works Act is to be repealed; the two most important sections in that act are to be repealed and there is to be substituted therefor paragraph (c) of the new section 36 of the bill which provides that where the minister is satisfied that the nature of the work renders a call for public advertisement impracticable, and that the public interest can best be served by entering into a contract for the execution thereof without inviting tenders, he may do so. To my mind that is a dangerous provision and one that we as a parliament should not possibly approve. In presenting his views the hon. member for Vancouver-Quadra brought forward a case which evidently the Minister of Fisheries (Mr. Mayhew) himself thought warranted the discontinuance of the practice of purchasing buildings or letting contracts without tender, or without the proper supervision of this house. Wartime, he said, made certain things necessary. We are no longer in wartime. As the hon. member for Vancouver-Quadra (Mr. Green) said a few moments ago, we are living in a period of buoyant economy, of inflation in this country, and certainly this is the very time we should exercise more care than we should at some other and more normal time.
I do not want to prolong this debate. When the hon. member for Vancouver-Quadra spoke this afternoon I think he spoke not only for the official opposition but also for at least the group for whom I have the honour to be speaking at the moment. We should either vote down this bill, or attempt to do it; or in view of the opposition expressed in the official opposition, and I am certain in my own group and probably in the opposition generally, the Minister of Public Works should withdraw this bill and not proceed with it not only at this session but at any time. If we pass this bill we shall be abrogating one of the rights of parliament, the right to lay down exactly how contracts shall be made, and shall be placing it in the hands of a minister, at the moment one perhaps for whom we have a high regard, but we do not know who his successor will be. We cannot tel] what the future will bring; consequently I
2020

Public Works Act
think the minister should either withdraw this bill or hon. members on all sides of the house should vote against second reading.


Solon Earl Low: I hate to have to speak in opposition to my friend the Minister of Public Works. I believe at any rate his intentions are good, but I cannot feel otherwise than that if this house passes this bill it will be derelict in its duties. The tender system was designed originally to protect the taxpayers and their interests. I think the Minister of Public Works knows that; but the amendment to the Public Works Act, as it is presented to us now in Bill No. 26, not only throws the tender system out the window, as was said by the hon. member for Vancouver-Quadra (Mr. Green) but-I want to emphasize what someone else interpolated at the time-it also throws the window out with the tender. Consequently if this bill is passed nothing will be left in the Public Works Act to protect the interests of the taxpayers of Canada.
I would not object to a change in paragraph (c) of clause 36 of the old act, raising the amount to say $10,000, to bring it more in line with modern valuations and costs; but I certainly object to going as far as this bill proposes to go.
I think the hon. member for Rosetown-Biggar (Mr. Coldwell) made a sound proposal. I believe the Minister of Public Works ought to withdraw this bill and not present it in this form again. In the light of the evidence that was brought before the house this afternoon by the hon. member for Vancouver-Quadra, it seems to me that we ought to be tightening up the tender system instead of loosening it, as we are doing in this legislation. We oppose it most strongly and we urge the minister to withdraw it. If he does not-well, we are bound to vote against it.


George Alexander Drew: Mr. Speaker, I think there are reasons why this amendment should be re-examined by the minister that perhaps have been covered very well by the speeches that have already been made, but which I think perhaps gain further emphasis in relation to some of the other acts that are before this house. One of the things that perhaps make it difficult for some of the members to illustrate the dangers in such an amendment as this as forcefully as they otherwise might is that the minister who puts forward this bill, by his very geniality, disarms criticism at the outset. In that regard, not being absolutely certain that we might not be called upon to address him in some other capacity at some other time, and that someone else might be occupying that office, we must examine this not from the point of view

of the individual who administers an act of this kind at the time but from the point of view of a public act which may be administered by anyone at any time, depending on the change of time and circumstance in public affairs.
This represents something more than the minister has put forward. I would say that from the point of view of the presentation of legislation, if the government wanted unsatisfactory legislation put forward, they should always have the Minister of Public Works be the advocate, because in this house you might describe him by the title of a book that I recall, namely "The Pilgrim of a Smile". He smiles his way through the greatest difficulties and differences, which makes it equally difficult for those on the other side to use as vigorous and as severe terms as should be applied to a bill of this nature.


An hon. Member:: How true.


George Alexander Drew: But I propose to approach this simply on the basis of an examination of the legislation itself. The minister has stated that this is a reaffirmation of a great principle.


Some hon. Members:: Oh, oh.


George Alexander Drew: Then he says in effect to the members of this house: we believe in this principle, but we ask you to disregard it and leave the continuity of the principle in the future to the discretion of the members of this government, or of any succeeding governments in the days ahead. I ask hon. members to look at this as something more than an amendment that merely affects those of us who are here today; and I do not mean those who are here this particular Saturday afternoon, but those who are now members of this House of Commons.
The Minister of Public Works has properly stated that throughout the years respect for public administration has largely rested upon the acceptance of this basic principle in awarding government contracts. There have been instances where there have been justified criticisms. There have been cases where that criticism goes to the extent of really bringing into question some of the details of this department and of other departments that have been put forward in this house this afternoon. But I would like to suggest reasons why there should be no suggestion of extending the provisions of this act now. I ask the Minister of Public Works to consider the advisability of withdrawing this legislation at this time, and not simply to move forward with the knowledge that in the ordinary course of events no voice is likely to be raised on the other side of the house no matter what the thoughts of the members on that side of the house may be.

Just a few days ago we had a striking example of the way the awarding of huge contracts is being carried out of the realm of ordinary supervision. We had before us for consideration the bill to set up the St. Lawrence seaway authority. It was very noticeable that in the terms of that measure, although $300 million is to be expended on the waterway part alone, there was no provision for the calling of tenders. An explanation was given which perhaps might gain acceptance by many hon. members. The argument was put forward that there should be no provision in regard to tenders in that measure because the door had not yet finally been closed upon the possibility that there would be co-operation between the government of the United States and the government of Canada in carrying forward the project. It was contended that perhaps their methods might not conform with ours, and that therefore it would not be wise to place restrictions in our act creating authority which might not conform with the practices the United States government would wish to follow. Nevertheless the fact remains that in those huge expenditures provision for tenders has been avoided.
Then we had under discussion earlier today the new provision in regard to crown corporations. There again we have a case where very large contracts are allocated in relation to what is essentially public business, without the necessity of tenders. For that very reason, as other measures themselves carry so much public expenditure beyond the tender system, I suggest that we should be putting in more restrictive rather than less restrictive definitions at this time.
Without going into that too extensively, I suggest that this government itself has afforded reasons why it should not now be asking for the relaxation of provisions of this kind. In the report of the Auditor General to the House of Commons, which we have just received in these last few days and which covers the financial period 1950-51, we see several references to practices which indicate the need for greater rather than less caution in matters of this kind. Already, under the section which would be repealed by the bill now before us, it was possible to dispense with tenders where there was a suggestion that there was an emergency. On page 11 of the Auditor General's report we find this:
Case 1. On February 28, 1951, the Department of National Defence instructed the Canadian Commercial Corporation to procure 200 quonset type huts by March 31, 1951. At the same time the department indicated that a Canadian supplier was in position to make immediate delivery and that "if necessary, this department is prepared to send a representative to the manufacturing plant of the 94699-1295
Public Works Act
successful tenderer and accept delivery as the huts in question are loaded for shipment to their final destination." A contract was awarded without (a) advertising for bids, or (b) the governor in council giving prior consent to the award. $948,142 was paid in the fiscal year 1950-51. The records indicate that the huts were stockpiled.
The government has just been told by its Auditor General that its practices are already extremely loose. This does not, of course, refer specifically to the Minister of Public Works (Mr. Fournier), whose smiling explanation would be most difficult to disregard if he gave it in the general terms he has already used to argue in support of the bill. Nevertheless, I say, the fact remains that here is a clear statement by the Auditor General that this government already finds it rather convenient to disregard the limitations that exist. And in this instance there was no urgent emergency for the acquisition of the huts- because they were stockpiled and not used immediately-if they were availing themselves of the provision that the need may be regarded as an emergency.
Then we have other cases set forth in the Auditor General's report. In some instances a device was employed that is constantly subjected to criticism when it is adopted. I refer to those occasions where original contracts were let by tender, and then at a later date there were readjustments of the contracts awarded for very much larger sums, with the simple explanation that these were extensions of original contracts. We find an example of this at page 8 of the Auditor General's report, where it says that vote 296 was for a firm contract of $179,182. That was the contract price arranged after tenders had been called. Following discussion and certain extensions that contract was increased to $365,232, in other words to slightly more than twice the original amount, without any subsequent tenders being called for. Then it is explained that in the case of vote 297 the original contract, following tenders, was approved at a figure of $49,836, and that in that case there was subsequent discussion and readjustments and a new contract was awarded for $89,832.
I mention those as examples furnished us within the past few weeks by the report of the Auditor General, where he shows a tendency on the part of the government to disregard the provisions of the act as it stands. And when we remember that provisions of this kind apply to all government departments including those departments which are purchasing enormous amounts of material at this time, then I suggest this goes far beyond any minor amendment. This would tear away completely the protection that has been

Public Works Act
afforded by that principle, which is affirmed by the minister but denied by the amendment itself.
This is no reaffirmation; this is a complete denial of that principle. For all practical purposes it would simply say that any minister who for one reason or other did not find it convenient to call for tenders, could easily find some ground for awarding contracts without tenders being called for. The most objectionable part of the proposed amendment is that part in which it states:
Where the minister is satisfied that the nature of the work renders a call for tenders by public advertisement impracticable, and that the public interest can best be served by entering into a contract for the execution thereof without inviting such tenders-
In that case they may be proceeded with by direct contract.
Without in any way bringing into this discussion any of those matters which were discussed earlier in the session, and which warn us of the recklessness of some departments of this government in the handling of public money, I think the Minister of Public Works, who has shown a much higher regard than some other departments of government for the authority of parliament, should withdraw the bill at this time and demonstrate to the House of Commons that he does in fact believe in that principle. The one reaffirmation he should afford this house today of his belief in that principle is to withdraw the bill.


Stanley Howard Knowles: Mr. Speaker, like other hon. members who have spoken I find it an unpleasant duty to quarrel with the Minister of Public Works (Mr. Fournier). He may find it difficult to understand that statement, in view of the fact that I quarrelled with him two or three times earlier this week. However, I think he knows what I mean.
I should like to underline some of the statements which have been made, but I do not wish to take undue time in doing so. In fact, having said that I will move on and deal with an aspect of the matter which I do not think has yet been discussed. I shall do this in the first place by setting out what I think might have been a better case for this bill than was made by the minister himself. I say that with all respect, as I realize he was trying to save time. He was also in very good humour.


James MacKerras Macdonnell: What case did he make?


Stanley Howard Knowles: You can see by his face that the minister is now enjoying the fact that he made no case at all. I want to make out the
best case I think can be made for it. Having made out the best case, I shall endeavour to show that even that best case is no case at all. The best case that could be made out for this bill would be on the basis of section 39 of the Financial Administration Act. If the minister had taken the time to tell the house that it is the firm intention of the government, once the Financial Administration Act has been proclaimed, to pass an order in council specifying a ceiling for all contracts that can be let without tender; if he had made it clear that this Bill No. 26 would not be proclaimed until that order in council had been passed, I say that would be the best case that could be made out for it. In other words, that would tell us that on the government's own terms they intended to retain the tender system.
What is wrong with the case is that it is on all fours with another battle we had this week. Even when you reaffirm the tender system by passing an order in council under section 39 of the Financial Administration Act, which would apply to the Department of Public Works and all the rest of the departments, all you have done is make the tender system one whose ceiling is determined by order in council rather than by a statute of parliament.
That is the real issue now before us. It is the same battle we had yesterday, and have had two or three times before, when other measures were before this house. Our complaint about that other measure of yesterday was that it whittled away the powers of parliament. I do not know whether any of us used that precise word in what we had to say, but certainly that was the intent of what we said. I would refer hon. members to an editorial in this morning's Ottawa Citizen dealing with that other measure. The editorial is entitled "Whittling the Powers of Parliament". The whole tenor of that editorial is to the effect that those of us who opposed that other measure were perfectly right in the principle we put forward, namely that parliament should not by that statute have surrendered the right to determine the salaries of the persons who were then under discussion. The editorial states:
Mr. Fournier, as acting Secretary of State, may argue with his usual suavity that there is no danger of loss of independence-
We have had that again today, the usual suavity and good humour of the Minister of Public Works. But this is the comment of this editorial on that other measure:
The present move represents a further whittling away of the authority of parliament, and a concentration of further power in the hands of the execu-

tive. All such moves of the kind should he resisted, no matter how innocent the purpose is represented to be.
That is what we did yesterday in connection with that other measure and that is what we are seeking to do now, resisting moves which whittle away the authority of parliament. As it now stands, parliament by statute has determined that contracts may not be let without tender if they are for an amount of $5,000 or more. I will take the Minister of Public Works at his word that it is the government's intention under section 39 of the Financial Administration Act to pass an order in council fixing an appropriate amount. We do not know what that amount will be. Maybe the order in council will specify $5,000; maybe it will specify $10,000, maybe the figure will be higher, but whatever figure is specified in the order in council it can be changed the next day, the next week, or the next month by another order in council. In other words, for all time the determination by statute as to what that ceiling will be is to be taken away from parliament. Once again, on Saturday as on Friday, the powers of parliament are being whittled away.
The one other point I wish to make is that section 39 of the Financial Administration Act, which is noted as being a new provision, is of general application. It deals with contracts. In other words it is wider in its scope than the matter now before us, because it covers all contracts. I gather that there will be an order in council laying down the general principles with regard to the calling of tenders for contracts of all kinds, including the execution of works, the purchase of materials, and what have you. What is before us in the Public Works Act is not the whole broad field of contracts; it is simply one section of that field, namely the execution of works. That has been in the statute for a long time, and wherever public works are to be executed the law passed by parliament lays down at what point tenders must be called.
I submit that even after an appropriate order in council has been passed under section 39 of the Financial Administration Act laying down the general provisions for contracts as a whole, there is still room for a special provision with respect to contracts for the execution of works; and the place for that special provision is to be found in the Public Works Act. I submit that it is still important that parliament have the right to say at what figure there must be tenders with respect to contracts for the execution of public works.
So I support those who have urged the Minister of Public Works to withdraw this
Public Works Act
bill. I do not mind if instead of withdrawing it he amends it to still leave subsection 2 of section 36 in, and amends paragraph (c) to change the ceiling from $5,000 to $10,000, let us say. But I do ask him not to do again today what he did yesterday in his capacity as Acting Secretary of State and take away from parliament the setting by statute of these ceilings which are so important.
We are getting altogether too much of this kind of thing. I am sorry to see our genial and very good friend, the Minister of Public Works, mixed up in it. He is not the Minister of Finance; he does not lay down these general practices and principles so far as contracts are concerned. I realize that he has probably been assured by the Department of Finance that this is perfectly in order, that this will be a reaffirmation of the tender system. The only way in which it is a reaffirmation of the tender system, if I may run the risk of repeating myself, is that it hinges on section 39 of the Financial Administration Act. The section is general in its terms; and it takes away from parliament for all time the fixing of the ceiling at which contracts must be let only after tenders have been called.
I say again that whatever may be the general provisions of any order in council passed under section 39 of the Financial Administration Act, we know that with respect to contracts for the execution of public works the statutory provisions such as we have had are gone. I urge the Minister of Public Works to retain that principle of fixing the limit by statute. Let him amend the bill and name in it whatever figure he thinks is reasonable at this time, but let us retain that principle.


George Harris Hees: Mr. Speaker, as has been pointed out by other speakers in this debate, the changes proposed by this bill would allow any minister for whose department a public work is required to declare that the calling of tenders for that work is impracticable and not in the public interest. He could then award a contract of an unlimited size without calling for tenders. In addition, he would not be required to submit the contract to the governor in council for scrutiny.
There is only one way to ensure that public works will be constructed at the lowest cost to the public, and that is by publicly calling for tenders. It is reasonable to exclude the types of contracts specified in subsections (a) and (b) of both the 1927 act and the present bill. I believe it is also reasonable, as pointed out by the hon. member for Vancouver-Quadra (Mr. Green), to raise the ceiling below which tenders need not be called from

Public Works Act
$5,000 to $10,000. I say this because the value of money today is about half what it was in 1927.
However, I believe that contracts for all amounts greater than $10,000, which do not come under the qualifications of subsections (a) and (b), must continue to be awarded by tender, and such contracts must continue to be scrutinized by the governor in council. To propose that this practice should be discontinued, as the government is proposing to do by this measure, is to invite inefficiency and cost padding, for which the public must foot the bill.
A procedure which very often creeps into the handling of contracts, both in the case of business corporations and the government, is that after the original contract has been awarded and is being proceeded with, additional contracts for work in the vicinity are awarded to the original contractor, simply because it is easier to do it that way than to call for new tenders. It is argued that the work can be more cheaply carried out by the man on the job, because he would not have the expense of moving his equipment to the job and because his price on the original contract was reasonable.
This practice results in work which is often many times the value of the original contract being done on a cost-plus basis. When that is done there is no incentive to keep costs down; in fact the incentive is quite the reverse-


An hon. Member:: Are you thinking of Comstock?


George Harris Hees: because the higher the cost, the higher the plus.
If the bill passes, I believe it will be a blatant invitation to political patronage, because the only qualification a contractor will then require, in order to obtain contracts of unlimited size, will be that he must be a faithful supporter of the government. This will provide a tremendous inducement to support the government at election time in more concrete ways than simply by good wishes.


Mr. Mcllraiih:: Are you speaking for the Ontario government now?


An hon. Member:: No, you fellows.


George Harris Hees: This is the kind of practice which we should be getting away from, rather than entering into. If the government forces the bill through, I believe it will be pursuing a course which is directly opposed to the public interest. If the bill passes, it will be inviting the kind of scandals we have been reading about in the newspapers lately, which are being unearthed by investigating

committees of the United States congress. I believe that in the interests of good and honest government the bill must be withdrawn.


Mr. Angus Maclnnis (Vancouver East):: Mr. Speaker, I want to add my voice to those of other hon. members who have spoken in opposition to the bill. I wonder if members on the government side of the house appreciate what is being done and how the bill departs from the provisions of the act in force at the present time. The amendment reads as follows:
Where a work is to be executed under the direction of a department -of the government, the minister having charge of that department shall invite tenders by public advertisement for the execution of the work-
If it stopped there, in my opinion it would be a good bill; it would be in line with what we are doing now. But it goes on to say:
-except in cases where
(a) the work is one of pressing emergency in which the delay would be injurious to the public interest-
That eliminates contracts of that kind.
- (b) the work can be more expeditiously and economically executed by the employees of the department concerned-
That eliminates something more.
- (c) the minister is satisfied that the nature of the work renders a call for tenders by public advertisement impracticable and that the public interest can best be served by entering into a contract for the execution thereof without inviting such tenders.
That wipes away every obstacle to letting contracts without tender. Why the cabinet, composed as it is of men who have been engaged in such work, who have been cabinet ministers and administrators for a long time, should wish to remove restrictions and thereby leave themselves open to all kinds of lobbying is beyond my comprehension. I would think that every member of the cabinet would want his authority to do anything of this kind limited to the greatest possible extent. Then he would be assured that his department would be run without even a suspicion that there was anything wrong. But here they are introducing a bill the result of which will be that with every bit of work that is to be done the Minister of Public Works (Mr. Fournier) will have on his doorstep all the people who want to do the work and who want to get a contract without having to tender. It is simply amazing.
As has already been said, $5,000 is not very much money today. Perhaps when the present act was put in operation $5,000 was quite a bit of money, but at a time when the dollar is only worth 50 cents $5,000 may be a very small contract. Why not enlarge the amount to $10,000, as has already been said, or if

Public Works Act
that is not enough enlarge it to $15,000 or $20,000, but for goodness sake put some limit so that the Minister of Public Works, or any other minister who is dealing with a work under the meaning of this act, can say to every lobbyist who comes into his office: "This has to be let by tender because the act says that it must be let by tender". Then all he can say is: "Good-day, you will have an opportunity to tender". But that is not what they are doing. They are inviting everybody who wants to get something for nothing to come in and see what he can get in the scramble.
As I have said many times, I have a great deal of respect for the members of the cabinet but, as I said before, I cannot understand men such as the Minister of Public Works, the Minister of Trade and Commerce and Defence Production (Mr. Howe), the Minister of Finance (Mr. Abbott), and the Minister of National Defence (Mr. Claxton), who have been administering public affairs for quite a long time, wanting to leave themselves open to the condition, human nature being what it is, that this legislation invites. Therefore I suggest to the Minister of Public Works, as others have done, that in the interests of good government and good public administration he should withdraw the bill and substitute something better for it, or amend it in such a way as to set an amount beyond which contracts cannot be let without tender.


Mr. A. J. Brooks (Royal):: I should like to say a word on this subject, Mr. Speaker. Like the others who have spoken I certainly have great respect for the minister, but I do not think it is the minister we are talking about; it is his bill. We cannot have the same respect for the bill that we have for him. So far as subsection (a) is concerned, I realize that there are emergencies. The minister has not mentioned any, but I am sure a matter such as the Winnipeg flood would be such an emergency. We can also go along with the minister so far as subsection (b) is concerned. But as other members have mentioned, the striking out of the $5,000 ceiling in subsection (c) and the failure to put in any other ceiling make it difficult for us to agree with that. In my opinion this is equivalent to changing from the tender system back to the patronage system.
When the minister spoke in introducing the bill he made some mention about the construction of the building here during the regime of Sir John A. Macdonald. I believe the idea in the back of his mind was that they were constructed more or less under the patronage system, and that was seventy-five or eighty years ago. What was done then is not good enough for today. When a previous bill was
before the house the parliamentary assistant spoke about the splendid record of our civil servants in Canada. This record grew up over a period of years. I am satisfied that if we had retained the old system of selecting our civil servants from friends of the ministers or the members we would not have the splendid record we have today. In my opinion, Mr. Speaker, the same thing applies to both tendering and patronage. If we take this retrograde step and return to the patronage system I am sure it will have a harmful effect upon this country.
I am inclined to feel that perhaps some of us come from sections of the country where patronage is a little more rampant than it is in other sections. I feel that my section of the country is more patronage-minded than some other sections. I know of patronage committees in our part of the country that would just lick their lips if they saw a subsection such as the one in this bill. They would see great possibilities in it. I hope that we shall not weaken the tender system. I have not heard the minister give any reasons why this step should be taken. He made a few remarks concerning the bill, but as yet he has not told this house why this subsection (c) is necessary. The subsection refers to cases where the minister is satisfied that the nature of the work renders the calling of tenders by public advertisement impracticable. The minister has not said whether that method will be impracticable in only a few cases or in many instances. If that section remains in the bill there may be a few cases at the outset, but as time goes on we will find such pressure that there will be more and more cases in the future. There is no comparison between the two systems, as the hon. member who has just spoken pointed out.
As has been stated, the fact that different contracting companies tender for a job means that the government is going to have the work done for less than if the contract is handed out to someone who has no competition. Then again, a contractor who is successful gets the very best man he can to help him carry on the work. From my own experience so far as government work is concerned, I know that when it is not performed under a tender system everyone flocks to the door of the man who has the work to do. If any of these people are friends of the government or friends of the party, they press their claim and receive consideration. The whole thing adds up to a greater cost so far as government work is concerned.
I feel it will be a great mistake if this bill is passed in this form, and I think the minister would be well advised if he withdrew it, as has been suggested by some members.

Public Works Act


John George Diefenbaker: Mr. Speaker, while various hon. members were speaking I sent out to the library for the purpose of securing the book that is the epitome of good parliamentary government in so far as finance is concerned. That book is Durell's "Parliamentary Grants". It sets forth the principles that should determine good parliamentary procedure. I feel I can do no better than read one or two portions of the preface which are applicable here.
Progress is essential as well as permanence; and progress is only possible if it is realized that methods and practices, which however good in themselves are no longer suitable to contemporary conditions, must be amended1 . . .
Principles, on the other hand, if sound remain unchanged. They are not affected by such considerations. They constitute a solid foundation on which systems are built up.
The great foundation principle of awarding contracts is that they shall be awarded by tender, unless an emergency makes consideration of the safety of the state take priority over the great and abiding principle that a tender must invariably be called. I know that tenders are difficult for governments that are patronage-minded. Tenders do interfere with governments that have political friends. There is a natural disinclination on the part of governments to be controlled in the awarding of contracts. The tendering system is designed to deny, so far as practicable, the use of political patronage for the benefit of the government and to the detriment of the state. The principle has been long embodied in all British parliamentary history that tenders should be awarded.
On page 339 Durell says:
The fundamental rules in making public contracts are that each should be put out to competitive tender, open or limited, and that the lowest should be accepted.
The only exceptions are those to which I have already referred, where the treasury board or the executive, because of conditions of emergency and the like, must depart from the asking for tenders in the interests of efficient and early action.
It is passing strange that this bill, involving a departure from the principles upon which our constitutional development has taken place in this country, should be introduced so late in this session. It is obvious what the purpose is. It is done so that parliament will grant this power because of a desire on the part of hon. members to return home with the approach of the Christmas season. The minister shakes his head negatively. If that was not the purpose of introducing this bill at this time, at least the result-it was hoped-would be effected by doing that. Sir, this is one bill we in this parliament should stand against and oppose, no matter how

long it takes and how much delay there is, in order to assure that it will not pass.
This bill is a dangerous one. This bill is the negation of every principle upon which true democracy is founded, particularly in connection with the financial responsibility of government. It is naively worded. As the hon. member for Royal (Mr. Brooks) has said, the first two subsections of section 36 are natural; there must be exceptions. But subsection (c) is a dangerous one. In effect, it says that the minister having charge of a department-and it is every minister-shall invite tenders by public advertisement except where the minister is satisfied that the nature of the work renders a call for tenders by public advertisement impracticable.
If you give any minister that power, or the authority to do that, it will not require any stretch of the imagination to believe that the minister will come to the conclusion that it is impracticable to grant tenders. "Impracticable" is a word with a wide definition: impossible in practice; unmanageable; impassable. If parliament grants this power to the minister of this government it will constitute an abdication of parliament's right to ensure that waste and extravagance shall not be condoned in advance, for that is in effect what parliament will be doing. It will be giving to the government or to a minister carte blanche to award contracts regardless of economy or any such consideration. It will be authorizing ministers to do that which the experience of history has shown is dangerous to place under the control of any minister.
I for one cannot support this action which, as my friend the hon. member for Royal has said, is a retrograde step that will be regretted by parliament as the years go by. In effect it says to ministers of the government: Award your contracts as you will. Parliament has given you the authority to do so. Consider no question of cost as long as you can believe that the calling of tenders would be impracticable and that the public interest can best be served by entering into a contract without inviting such tenders. Authority will have been given which will assure that any spendthrift department may spend as it will, and be authorized by parliament in advance to do so. It will be an invitation to patronage, waste and extravagance. It will place the public administration of this country at the mercy of the political friends of the government. It will constitute on the part of parliament approval of the return to a system of flagrant patronage.

Today contracts are not small; they are large. What a seductive piece of legislation this will be for the political friends of the government, who will be able to approach ministers of the crown and show how impracticable it would be to award a contract by tender, with the power granted by parliament to award it without tender. As far as I am concerned, I should like to see some of the members supporting the government speak on a matter such as this. Is it not strange that, as we sit here in parliament, only those who are opposed to the government oppose this kind of thing. This is a retrograde and dangerous step. I for one- I care not how long this session will last- will do everything I can to oppose being made the law of this country this bill which will place the public service at the mercy of the patronage friends of the government, and will place the ministers in a position to see that from now on contracts will be awarded without tender.


Douglas Scott Harkness: Mr. Speaker, I rise because I believe I would be failing in my responsibility as a member of parliament if I did not condemn this bill in the strongest possible terms. As a matter of fact I am amazed at the government bringing in such a bill. I am amazed because it is such a barefaced attempt to bring back the patronage system and make it the only system operative with regard to government contracts.
The fact that this bill was introduced and brought before us at this stage of the session, when most of us had reservations and expected to be on our way home or to be going home shortly, certainly leads one to think the hope was that it would slip through without too much opposition. As has been indicated by other hon. members who have spoken, I think probably any hope the government had of that kind is now dashed.


Alphonse Fournier: This bill has been on the order paper since November 23.


John George Diefenbaker: And was held up.


Douglas Scott Harkness: Yes.


Alphonse Fournier: It could not be proceeded with before the other one was dealt with.


Douglas Scott Harkness: I have not heard one good reason advanced by the minister or any other member of the government, or any member of the party supporting the government, as to why this bill should be put through. Not one good reason has been advanced for it; and certainly all kinds of reasons have been advanced by members on
Public Works Act
this side of the house as to why the bill should be defeated, withdrawn or amended. I would certainly hope that action would be taken along one of those lines.
Even under the system we have today under which, generally speaking, all contracts are let by tender, a large number of contracts have been the subject of criticism. The case cited this afternoon by the hon. member for Vaneouver-Quadra was-, to say the least, a bit unsavoury, in my opinion. There are all kinds of other contracts about which there has been a considerable amount of talk; and I do not think all that talk was without some just foundation. The way in which many of these contracts were renegotiated after the tender was let, and the amount paid to the man who got the tender increased considerably, is one of the-


Clarence Decatur Howe: Will my hon. friend name one? He is talking in wide generalities about renegotiating contracts upward. I would ask him to name one.


Douglas Scott Harkness: I would ask the minister if in fact a large number of contracts were not renegotiated.


Clarence Decatur Howe: Renegotiated downward, but never upward.


Douglas Scott Harkness: Does the minister say that no contracts have been renegotiated upward?


Clarence Decatur Howe: Quite right. Does my friend know of any? My hon. friend is talking about renegotiating contracts. Does he know anything to base it on?


Douglas Scott Harkness: Yes, there were two cases this afternoon.


Clarence Decatur Howe: Two cases where work was added.


Douglas Scott Harkness: As a matter of fact I am not familiar and cannot bring-


Clarence Decatur Howe: Certainly you know nothing about the situation, but you can keep on talking.


Douglas Scott Harkness: I said at the moment I cannot bring out the proof, but I do know I have heard a great deal of talk about a large number of these contracts, and I do know that a large number of contracts were renegotiated.


Clarence Decatur Howe: You just said you did not know.


Douglas Scott Harkness: And upward.


Mr. Hodgson:: "Who will stop us".


Douglas Scott Harkness: I said I could not produce the proof at this moment. I did not say I did not know.

Public Works Act


Clarence Decatur Howe: It is all very well to get up and smear the government with no facts.


Douglas Scott Harkness: Mr. Speaker, the minister seems to be extremely sensitive on this. I wonder why he is so sensitive.


Mr. Ferrie:: The best businessman in
Canada; why would he not be?


Douglas Scott Harkness: That just leads me to think what the situation will be if this bill goes through, as far as the Department of Defence Production is concerned.


Clarence Decatur Howe: Do not worry about that. The Minister of Defence Production has been in that department a long, long time. My hon. friend is just passing through.


Douglas Scott Harkness: We are all passing through this world, and I think perhaps the minister is passing through at the present time a little more rapidly than I am.


Stanley Howard Knowles: The Department of Defence Production was set up only a year ago.


Douglas Scott Harkness: In any event, to come back to the Department of Defence Production and the contracts which will be let by it; they will aggregate, I suppose, something better than $3 billion.


Clarence Decatur Howe: Yes. They aggregated $13 billion in the last war. What about it?


Douglas Scott Harkness: Under the present rearmament plan they will aggregate something better than $3 billion in the next two years or so, and under this provision, as far as I can see, it will be possible for every one of those contracts, aggregating that very large sum, to be let without any tenders being called; and I would think it is very likely that most of them would be let in that way.


Clarence Decatur Howe: Every tinpot lawyer can get up and make statements of this kind without any justification whatever. That is the privilege of this parliament. Go ahead.


Douglas Scott Harkness: I would ask the minister to retract that immediately. To begin with, Mr. Speaker, I am not a lawyer; and in the second place, I have nothing to do with tin pots which the minister seems to be very familiar with. The minister often makes these statements. The last statement is typical of the statements he makes.


Clarence Decatur Howe: I will say any colonel, then.


Douglas Scott Harkness: As far as I can see this bill is another example of the very apparent desire on the part of this government to rule in Canada without the checks and controls, either parliamentary or otherwise, which are necessary if good government is to prevail. As has been suggested, if we are to continue
[Mr. Harkness.!
to have good government in Canada, if we are to continue to have anything in the nature of economy in the matter of government contracts there is no question but that the bill should be withdrawn. Or it should be amended, as was suggested by two or three speakers, by putting a limit of $10,000, or some other sum, in, as the amount of any contract which can be let without tender.


Mr. A. Earl Caiherwood (Haldimand):: Mr. Speaker, I should like to say a word or two in opposition to the legislation that has been introduced. However, in the first place I might mention that I could support a change being made in paragraph (c) of section 36, which I feel is due to be revised. The $5,000 figure is certainly out of line with the situation that existed back in 1927, when the legislation was reconsidered; and along with my colleagues I can agree that this figure should be increased to either $10,000 or $15,000. With that I am in complete accord. I feel, sir, that in the interests of all other contracts that are issued by the government, and in the interests of the government themselves, we should be protected by the tender system. Those of us who have served in the municipal field of government know full well that when we asked for tenders we did so because it was the proper system. We realize that the public are always sceptical when the tender system is not followed in any contract. All hon. members who have served in the municipal field and who have been associated with civic and rural administrations recall that we never entertained thoughts of givings contracts even up to $100 without asking for tenders. Even at times when we did consider amounts of less than $100 in municipal work we were very politely and plainly told by government officials that the auditor of the government would not pass the accounts if we did not adopt the tender system.
Most people, sir, will agree with this procedure. Most hon. members feel down in their hearts that this should be the proper system. As far as municipal bodies are concerned, they have built up through this system of tenders on all contracts a feeling of confidence among the people in the various provinces. That is something we want to cherish and maintain.
I say to the minister in all sincerity that we do not want to embarrass him in any way in this matter, but we do feel that in government circles we cannot be too careful because we want to hold the confidence of the people whom we serve. If we are to maintain that confidence, sir, we must not give anyone an opportunity to believe or even to think it will be destroyed, but that good will shall be maintained.

I should like to say very clearly that one of the functions of government is to maintain those principles that have been advocated and carried on in municipal affairs. No one wants to see excessive powers placed in the hands of any department of government, and I am sure the Minister of Public Works will reconsider this bill for that very reason. We realize that it may cause some delay to ask for tenders on some of those contracts, to wait for them, to open them and so forth, but I say, sir, that the spotlight of the people of Canada shines very brightly and searchingly on the government and on parliament. In order to maintain the good will of those people again I say I cannot support this legislation. I trust it will be reconsidered by the minister.


Mr. W. G. Dinsdale (Brandon):: Mr. Speaker, when this debate began this afternoon I must confess that I was somewhat disarmed by the very genial manner in which the bill was presented, because on my first reading of it I had come to a conclusion on this piece of legislation somewhat similar to that expressed by other members of the opposition today. Of course I must admit that, being comparatively new in the house, I am not familiar with political wiles to the extent that some of the older members of this house might be. However, I soon had my original interpretation of the bill reaffirmed as I listened to the excellent presentation by the hon. member for Vancouver-Quadra (Mr. Green) first of all, and those who have succeeded him in the discussion this afternoon.
In view of the very genial atmosphere prevailing in the chamber, at least up until just a few moments ago, I was going to take the risk of deviating from the dominant theme this afternoon and rather go off the track momentarily on behalf of the three prairie provinces, and Manitoba or western Manitoba in particular. But perhaps the tone of peacefulness prevailing thus far is to a certain extent disappearing, so I think I will not take the risk of presenting the case I had in mind.
I should like to speak not from the standpoint of any practical implications, that might arise from the proposed change in the act. As I have said, I come from the prairie provinces. The intent of the bill does not concern us too much because there are so very few contracts awarded in the prairie provinces. Actually we have no ulterior motive and no political intent, so far as this bill is concerned.
In the few remarks I shall make I should like to speak briefly about the principle involved. One of the problems that occupy
Public Works Act
the attention of students of political science in these days is that of the difficulty of maintaining parliamentary and representative democracy in a day when our parliament is forced to assume more and more power in order to operate the affairs of state. This has been particularly noticeable since the functions of parliament changed from those basically political to those of an economic nature. This bill concerns itself with the economic functions of parliament. The question with which the learned scholars occupy themselves has to do with exactly the thing represented by this bill. Is the executive assuming, to an increasing extent, more and more of the functions of the legislative part of parliament, the functions of the representatives of the people?
Recently a colleague of mine sent a letter asking me, now that I am actually engaged in the rough and tumble of political activity, whether it was true that such is happening. The theory is abroad that there is a very subtle trend toward this whittling-down process that has been referred to this afternoon. That inquiry was made at the beginning of the session. At that time I had not had enough practical experience to give many examples. But I suggest that during the last few weeks I have discovered many examples without any difficulty. We see one here this afternoon, and there was another in connection with the civil service legislation yesterday afternoon.
I have come to the conclusion that politics is an art, not a science. But I think if this bit of political artistry goes through this afternoon it will have the learned scholars, the learned political scientists, shaking their heads and speculating upon the possible fate, the possible future of our democratic parliamentary institutions.
I heartily support everything that has been said by opposition members this afternoon, and along with the others I suggest that the best recourse at this time would be for the minister to withdraw the bill. In closing I must say that during this session I have appreciated the words of encouragement offered to me, as a new member, by the Minister of Public Works (Mr. Fournier). Along with other members I have come under his gracious and charming influence. When I began my remarks this afternoon I was somewhat disconcerted for the moment, because of the benevolent manner in which this noxious bit of legislation has been presented.
I am sure after everything that has been said this afternoon the only reasonable

Public Works Act
approach to the dilemma in which the Mr. C. W. Hodgson (Victoria, Onl.): Mr. minister finds himself will be for him to Speaker, the hon. member for Charlotte (Mr. withdraw the bill.	Stuart)-


Mr. A. W. Stuart (Charlotte):: Mr. Speaker, there has been a suggestion that some member supporting the government should have a few words to say in regard to this bill. I shall take but a very few minutes to bring to the attention of the house the fact that, in some branches of the Department of Public Works, there are times when urgent calls are received, and they require speedy action.
Let me put one case on record. In 1946 it happened that within my riding, at Leonard-ville, Deer Island, the breakwater was completely destroyed by a storm. In that harbour a valuable fleet of boats was left without any protection whatsoever. Telegrams, telephone messages and letters began pouring in to me stating that something must be done immediately. I got in touch with the Minister of Public Works (Mr. Fournier), and the engineers in the New Brunswick branch of the department. They made an investigation and found that the condition was exactly as I had described it.
An endeavour was made at once to find a contractor who would go down and do the necessary work. I repeat that a fleet of valuable boats was affected. The people operating those boats depended upon the breakwater for landing facilities in connection with everything landed there by means of water transportation. All those commodities the people had been accustomed to receive, and which were a great convenience to them, were lost completely. Seventeen or eighteen months elapsed before a contractor could be found to build the breakwater. During those months the boats were obliged to use a harbour many miles away, and those who operated the boats, if they got home at all at week-ends, had to do so the best way they could.
For these reasons I feel there are many cases of emergency which call for speedy action, and the bill we have before us today will receive my support because I believe the Department of Public Works and the other departments of government are perfectly capable of having the work done in this manner, instead of calling for tenders.


Stanley Howard Knowles: That is covered under paragraph (a).


George Harris Hees: That is covered in the first paragraph.


Alphonse Fournier: Do you want me to-


James MacKerras Macdonnell: No, we like this.
fMr. Dinsdale.l


Gladstone Mansfield Ferrie: Oh, oh.


Clayton Wesley Hodgson: Oh, if you would stir yourself a little bit, and have something to say about it, all right; but you would not know what he was talking about. You can't tell me anything, because you have not been here all afternoon. I don't suppose you people ever read the bill.


An hon. Member:: Have you read the bill?


Clayton Wesley Hodgson: May I point out to the hon. member for Charlotte that section 36(a) takes care of the situation he described. The work he mentioned would be one of pressing emergency, in which delay would be an injury to the public interest. In that case of pressing delay the minister is allowed to go ahead. But I am objecting to paragraph (c), where the responsibility is left in the hands of the minister; and not only the Minister of Public Works but ministers in other departments. I am surprised he would want this provision written into the bill. It takes away the right to tender, and will leave more people with their hands on his door-knob looking for jobs and contracts, and all that sort of thing.
Under the tender system the minister at least has an out. He will not be bothered from Friday night until Monday morning with people looking for this, that and the other thing. They have to put their tenders in, the same as anybody else. The tender system also takes away the grounds for criticism. For instance, jobs could be let without tender. There was a case of that kind in connection with the Minister of Trade and Commerce (Mr. Howe). There was considerable discussion in the house not long ago about a job that had been let without tender.


Clarence Decatur Howe: What job was that, does the hon. member remember?


Clayton Wesley Hodgson: C. D. Howe and Company.


Clarence Decatur Howe: We are back on the old debate. C. D. Howe and Company is a professional firm, as are architects. To my knowledge it is not customary for the government to call for tenders for professional services. If my hon. friend wants to debate C. D. Howe and Company, let us adjourn this debate and I shall be pleased to take him on. Otherwise I think he had better drop that particular subject.


Clayton Wesley Hodgson: The Minister of Trade and Commerce has just brought out the very point I was coming to. I am glad he has explained it to the house because it saves me the trouble. I was in the house the day that debate took place. By taking away the

right to call for tenders on contracts we increase the possibility of criticism of the minister of any department. I hope the Minister of Trade and Commerce will not get too angry about it because I had no intention of taking him to task or inviting a debate with him. I do not want to get him into the position where he will say "Who will stop us? If we want to do anything who will stop us?"


Clarence Decatur Howe: Nobody is bothering to stop you.


Clayton Wesley Hodgson: He also said "What is a million dollars?" We do not want to get the minister into that mood; we would rather have him in his genial mood. My experience in public life has shown me that the tender system is the only system to follow. When you let contracts without tender you do not always know that you are getting the lowest price. It certainly is not in the public interest or to the public liking. Yesterday we had a case of the government taking more responsibility and authority under the Civil Service Act. In that instance I believe they were taking away the independence of the civil service commissioners. They disagreed with us; nevertheless that was the way I saw it. Today they are taking more responsibility and are asking that parliament give up certain rights which are to be taken by themselves.
I wish more Liberal members would get up on this issue and say what they really think about it. I do not like to see them sit in their seats and say nothing, and then be whipped into line to vote on the motion without having voiced their opinion.
I think the Minister of Public Works would be well advised to reconsider this bill and rewrite it so it will be satisfactory to this house and the people throughout the country. If this thing gets out into the country what will be the ultimate destination? It will be on an overland route of votes. It will not be only in the province of Ontario, it will be from coast to coast; and this government will find themselves sitting on this side of the house, in the opposition.


James MacKerras Macdonnell: Mr. Speaker, I think everyone enjoyed the turn put on this afternoon by the minister. He does make it hard to be indignant, as has been said earlier, but we should be indignant about this. This is nothing less than throwing down the drain a practice which has had the isanction of generations, perhaps even of centuries, in free governments. I confess that I was slow to realize the full significance of it. The first two paragraphs are fairly wide, but the third one just takes the lid off. I can see no limitation of any kind1. There is nothing that could not be done under that.
Public Works Act
You could do everything under that except make a man a woman or a woman a man.


Alphonse Fournier: I could; not do that.


James MacKerras Macdonnell: As I say,
I was slow to realize what could be done. This seems to me by far the worst thing that has been brought before us. I am glad to note that there has been some response to the struggle which some of us made in the case of the civil service bill, but if we were correct iru describing that as chiselling at the rights of parliament we would have to get some gigantic word to describe what is happening here, some word like smothering, blasting or some other word that implies the destruction of everything.
I think it was the hon. member for Charlotte (Mr. Stuart) who made the point that there would be cases of emergency or where it might be in the public interest to forgo the calling of tenders. I agree with that. We are sensible people-at least we like to think we are. There may be some concessions that should be made, and we are ready to consider them.
I like to think that I use moderate language, most of the time at any rate, but I think that this is an outrage on parliament.
I have often disagreed with the government, and I suppose I shall again, but I have always been able to see some argument on their side, although it might be a bad one. But I cannot see any argument for this at all. The minister did not give us an argument. He delighted us; he entertained us; he made us laugh, but he did not give us any argument for this extraordinary change in parliamentary procedure.
I should like to refer to one or two opinions which have been expressed by those in the trade. First I should like to read from the Daily Commercial News a summation of the opinion of those in the construction industry, and which is exactly what you would expect it to be. I quote from the issue of December 10 as follows:
A check by the Daily Commercial News finds there is distinct disquiet in the industry over an amendment to the Public Works Act (Bill 26), now before parliament.	.
This appears to indicate an abrupt change in the long-established government policy of openly calling competitive bids on almost all federal public projects valued at upward of $5,000.
And later:
Some in the industry say they are even more concerned about that aspect of Ottawa's almost sudden proposal to revamp the Public Works Act which, they remind fellow construction men, governs federal departments other than the Department of Public Works.
The impression is abroad that this could open the way for switching the opening of public works tenders and the letting of public works contracts

Public Works Act
entirely away from the federal cabinet and reposing that authority wholly in the departments and offices of the ministers individually.
This is not something that can be done just by the Minister of Public Works (Mr. Fournier), who would do it pleasantly and genially; it is something that can be done by all ministers, some of whom would not do it nearly as nicely. Apparently they are all to have this power. We have the Defence Production Act which grants very wide powers, but I doubt if they are much wider than this. There are two things to remember about the Defence Production Act. First, we hope that it will be temporary, that it will end some day and, second, we realize that it deals with what we all recognize as an emergency. I do not know whether the Minister of Trade and Commerce (Mr. Howe) has innoculated the Minister of Public Works, in the sense of contaminating him, in the sense of filling him with some desire for wide-open powers. Now I should like to read a short opinion from an independent newspaper in Toronto, the Telegram.


An hon. Member:: Very independent.


An hon. Member:: Non-partisan.


James MacKerras Macdonnell: I understand the Telegram describes itself as independent, and I have no reason whatever to doubt its word. The Telegram has this to say, as found in the issue of November 29:
The long-established practice of inviting tenders for the construction of dominion projects will be jeopardized if parliament passes a bill . . .
And so on. I think "jeopardize" was an understatement. It would not be any case of jeopardy. It would be a case of the finish, the end. I have indicated some of my feelings about this matter. There are two other things I should like to say. Within the time available I tried to find out whether there had been any other debates on this matter, whether the question had been under discussion before. I can find nothing, and I think the reason is that it has never been questioned. It has been a part of our political thinking. It has been a part of the landscape. Nobody has ever questioned it. I have no doubt that when the minister produced this extraordinary document he must have been surprised at himself. He must have said: Well, if I get these fellows on a Saturday afternoon and treat them gently I may get this thing through. After all, let us remind ourselves that he has given us no reason yet. He has entertained us, but he has given us no reasons. I imagine he is going to give section 39 of Bill 25 as a reason and I want to warn him in advance that so far as I am 
concerned that is no answer at all. It merely comforts us with the thought that the great and good cabinet will decide these things, but that is not satisfactory to us. We are still among the simple people who believe that parliament means something.
I admit it is difficult for anyone outside the opposition to believe that any more, and when I say "opposition" I mean all the opposition. It is very difficult because we realize there are a lot of people in the house who feel a bit cramped in their style in expressing their views, but happily we are not cramped yet. I think that is pretty nearly all I want to say. There may be one or two other points the minister would like to hear. As I said to the minister, we have here a change which seems to me to go to the very root of the matter. It throws not only out of the window-that would not be so bad because we might go and pick it up-but down the drain what after all in any man's language who has thought about the institution of parliament at all must be, if not the cornerstone, at any rate one of the most important rights. I cannot imagine any right more important, and the minister seeks to get rid of it by this simple clause which he tries to read to us in a sort of soothing syrup manner. The base may be sweet; nevertheless the poison is there. It is 6.15, Mr. Speaker. I move that the debate be adjourned.


Alphonse Fournier: We agree that you may adjourn the debate.


James MacKerras Macdonnell: It is 6.15, Mr. Speaker.


Alphonse Fournier: Yes, you adjourn the debate.


James MacKerras Macdonnell: I just want to be sure that I have adjourned the debate.


Alphonse Fournier: Yes, yes, we all agree. Just one word-


An hon. Member:: Not to close the debate.


Alphonse Fournier: I am not going to close the debate. I want to announce the business for this evening because I committed myself to my colleague, the Minister of Trade and Commerce (Mr. Howe), that he could proceed with Bill No. 44.


James MacKerras Macdonnell: Do you mean to say we are not going to go on with this?


Stanley Howard Knowles: Did the minister submit a tender?


Clarence Decatur Howe: You adjourned the debate.


Alphonse Fournier: I looked for a chance to reply this afternoon, but we will go ahead with Bill No. 44 at eight o'clock tonight.


James MacKerras Macdonnell: You had
your chance.


Alphonse Fournier: I do not know if we will resume the bill on public works later or if we will take up the bill of the Minister of Agriculture (Mr. Gardiner).


James MacKerras Macdonnell: I have not very much more.


Alphonse Fournier: Then there is a bill under external affairs. Those are the bills we are going to proceed with.


George Alexander Drew: Without extending the debate, I hope the doubt the minister has expressed as to whether we may be discussing this amendment to the Public Works Act later suggests the possibility that he is going to withdraw the bill. I would remind him that it will be only a short time until next session, when full consideration can be given to it.


Alphonse Fournier: In all fairness, my intention was to take time to digest all the advice that has been given to me from all quarters of the house. I do not take this bill in a-


An hon. Member:: Casual.


Alphonse Fournier: -casual way. I
believe it is serious. I have listened to every hon. member, and with the exception of one or two they all dealt with the amendment. A few others straggled around. I could name the hon. member for Vancouver-Quadra (Mr. Green) because what he has said today appears in the Vancouver Sun. It caught my eye while he was speaking. His speech came out in Vancouver before he made it here. It is all there.


Clayton Wesley Hodgson: He is doing the same thing as the Minister of National Defence (Mr. Claxton).


Howard Charles Green: What about the bill?


Alphonse Fournier: I wish to have the advantage of replying. I want to think it over and I should like hon. members to think it over.


Edmund Davie Fulton: You should have thought it over before you introduced the bill.


An hon. Member:: Think it over until 1952.


Alphonse Fournier: I should like hon. members to think about section 39 of the Financial Administration Act, and we will see who gets the powers.


Stanley Howard Knowles: That gives it to the governor in council.


James MacKerras Macdonnell: Don't give us that.
Grain
On motion of Mr. Macdonnell (Greenwood) the debate was adjourned.
At 6.15 p.m. the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at eight o'clock.

Clarence Decatur Howe: the second reading of Bill No. 44, to provide for short-term credit to grain producers in the prairie provinces to meet temporary financial difficulties arising from inability to complete harvesting operations or to make delivery of grain.


Mr. Ross (Souris):: Will the minister make a statement now?


Clarence Decatur Howe: Yes. In my statement, made on the resolution, I mentioned that this legislation is not a relief measure in the customary sense, but rather is intended as a means of "broadening the base" upon which the banks can make commercial loans to producers. Although the general need for this type of assistance has been diminishing because of the resumption of harvesting in many parts of Alberta and Saskatchewan, nevertheless there are still some instances where the need is great and where producers would find it difficult or impossible to obtain the credit they require without this legislation.
In essence, therefore, the bill provides for loans to be made by the banks on a commercial basis to producers who are unable to harvest or to deliver their grain. By producers I mean the persons actually engaged in the production of grain, as distinct from landlords and others having an interest in the proceeds from the sale of the grain. After a loan is made the proceeds of the first grain delivered thereafter are to be applied to the reduction of the loan until the loan is repaid. An endorsement to that effect will be entered in the delivery permit book of the borrower. The aggregate principal amount of all loans is limited to $20 million. That is the upper limit, and my expectation is that the total of producers' applications will be considerably less than this amount. The government's guarantee to each bank is limited to 25 per cent of the aggregate principal amount loaned by that bank.
The bill provides that the maximum loan to any borrower may be $1,000. This maximum is subject to two qualifications. The first proviso is that if the value of the grain the borrower expects to deliver before the end

Grain
of the crop year is less than $1,000, the established value of the deliverable grain becomes the upper limit of the amount of the loan. The siecond qualification applies in either case, and involves deducting from the maximum amount of the loan the value of any grain delivered by the borrower between September 1, 1951, and the date on which the loan is made. Since the intent of the bill is to assist those producers who are without funds because of their inability to complete harvesting or to make delivery, it is fair and proper to deduct the value of grain already delivered. Similarly, since these loans are being made on a commercial basis, it is obvious that the value of the security must be at least equal to the amount of the loan.
The bill provides that the last date on which loans can be made by the banks is May 31, 1952. Any producer will know by that date whether or not he is in need of this assistance. All repayments should be completed with the balance of deliveries to be made from the 1951 crop before July 31, 1952, and the government's liability to the banks on any outstanding claims does not become effective until October 1, 1952. Because of the practical basis upon which the credit base is being enlarged under this legislation there will not be, in my opinion, any volume of outstanding claims upon which the government will be called upon to implement its guarantee.
The basis for my opinion that the government's liability under its guarantee is negligible rests fundamentally upon my belief in the integrity and good faith of western grain growers. There are also suitable security provisions in the legislation. I have already mentioned the endorsement which the borrower will insert in his delivery permit book. In addition the bill requires that a responsible officer of the bank shall scrutinize the loan application with the same care required of him by the bank in its own ordinary business. Section 6 of the bill authorizes the banks to lend money on the borrowers' grain, whether threshed or unthreshed, and gives the banks the same security on such grain as is otherwise provided in the Bank Act. Section 8 gives the lending bank a prior claim to the proceeds payable on delivery of the grain. And finally, under the heading of security, section 10 of the bill provides the crown with the right to receive from the Canadian wheat board any adjustment or participation payments which are due or may become due to the borrower. This will only apply, of course, in cases where the Minister of Finance has had to make payment to a bank as a result of a guaranteed loan.

Hon. members will note that there is no provision in the bill for repeal of the legislation. This is to enable the crown to maintain its claim against payments which may become due in the future by the wheat board to defaulting borrowers. It should be noted, however, that much the same effect as a repeal clause is provided by specifying that no loans may be made after May 31, 1952, and by providing the cut-off date of October 1, 1952, for purposes of the guarantee.
I believe that hon. members, upon study of the bill, will agree that we are dealing with the situation in a businesslike way. I repeat that what is required is not a form of relief. Nor is the legislation anything in the nature of a handout. Rather it is a means of providing short-term credit on a business basis to a group of producers who are finding it difficult to meet their living costs because of their inability, for the time being, to deliver their grain.


James Arthur Ross: In discussing this measure in the resolution stage, Mr. Speaker, I pointed out that when we received copies of the bill I fully expected the rate of interest would be set out. As a matter of fact, when other speakers attempted to question the minister during the resolution stage he said he could not go into details until the bill was before the house, which is the proper procedure. As I have looked through the bill I cannot find any section which sets out the rate of interest. I feel disappointed in that because the minister said this bill would be patterned after the Farm Loan Improvements Act. In that act the rate of interest is specifically set out. I am disappointed because many of the small operators who find it difficult to finance will probably still find it difficult to obtain a loan from the bank under this measure. The fact that no rate of interest is stated in this measure will make it difficult for the small operator.
In the part of the country in which I live the same local bank will charge different farmers different rates of interest, depending upon the status and security of each. I think this house will be disappointed in the fact no rate of interest is set out in the bill, as there is in the Farm Loan Improvements Act. If this was intended to assist the small operator who is finding it extremely difficult, the measure will prove disappointing.
According to the estimate of the minister, the percentage of the grain which is still in the fields is as follows: 50 per cent in Alberta, 25 per cent in Saskatchewan, and very little in Manitoba. Taking the minister's estimate and comparing it with the report of the bureau of statistics issued on the 13th, it

would prove that on the basis of the initial payment, with the total wheat crop of the three prairie provinces estimated at $600 million, there is still unharvested $175 million worth of wheat. There will be other payments to come later. That is the value that is out. The government guarantee of $5 million-that is 25 per cent of the $20 million 

is therefore less than 3 per cent of the total unharvested crop, which is not very good. I imagine that the large operators who have considerable grain out, while they have had terrific expense, still would probably be able to finance at the bank. I therefore think that a great many of the people who most need this assistance will be greatly handicapped, and the more so when there is not a rate of interest set forth in that bill. I am terribly disappointed that the rate of interest is not embodied in the bill because, as I say, I know that men in my own community -neighbours of mine and myself-when we are arranging credit for the year, are charged a different rate of interest. Therefore you will realize what a great handicap that will be to the small man whose credit is not too good in that community. In many instances he will probably not be able to get assistance under this legislation.
There is much else I might say about this bill, but I do not want to repeat what took place at the resolution stage. I still hope something can be done to have inserted in this bill a definite rate of interest which will be of assistance to the small operators who greatly need it. I am also sorry that this matter was not dealt with somewhat earlier, because many of these people who have little other income, who have families to provide for, and with winter now upon us, find it difficult to make bare provision for their families let alone provide them with a proper Christmas. I should like to have seen this matter dealt with some weeks ago. May I appeal to the minister to have inserted in the bill, even in the committee stage, a rate of interest which will provide for all the operators throughout this stricken area of the prairie provinces.


Percy Ellis Wright: Mr. Speaker, I think one thing the minister said was exceedingly true indeed. That was that the government risk in making these loans is negligible. I would, however, give a different reason from the one he gave. He said it was negligible because of the confidence the government have in the farmers. I would say the government's risk is negligible because of the conditions under which the loan is made. No farmer can obtain a loan without first producing his delivery book and having
Grain
the loan indicated in the book. He cannot make delivery of a bushel of grain for which he receives payment through the wheat board without that loan being first taken care of. As far as the government is concerned there is no risk. All they are likely to have to meet, I would say, is 5 per cent of the amount they guarantee under this bill, because of these restrictions. The only person who could possibly be a risk would be someone who quit farming this year, never delivered another bushel of grain and had no payments coming through the wheat board. He is the only man who could possibly default, in view of the conditions laid down in this bill as I read it.
The matter of interest raised by the hon. member for Souris (Mr. Ross) is one that I raised yesterday. As he has stated, the banks in the western area charge different rates of interest depending on the risk they think is involved in making the loan. A large operator or farmer can go in and quite often get a rate of interest of 5 per cent. When a smaller farmer goes in, where the risk is greater, he pays 6 per cent. When the wheat board borrow money to finance initial payments on the grain bought by the wheat pools and the elevator companies, they borrow money at 4 per cent. When the wheat board, as a government agency, apply to obtain funds from the banks for the carrying of the grain they hold, they have a rate of 3 per cent. So as I see it, under this act different rates of interest may be charged to different farmers, depending on the views of the bank manager as to the risk involved. I do not think there is any risk-or if there is it is negligible-where the entry is made in the delivery book of the farmer. If he delivers grain at any time afterward or receives payments through the wheat board, those payments must be first charged against the loan.
The people who are really affected, at least in the area from which I come, are those who live a long distance from the banking institutions. In my own constituency the distance from Hudson Bay Junction to Tisdale is approximately 100 miles. There is a bank in Hudson Bay Junction and there is a bank in Tisdale. There are several hundred farmers living at Prairie River and Mistatim, or along that line, who are forty or fifty miles from either of those banks. They have to journey to one or the other of those towns in order to negotiate a loan. They have probably never before been in the bank asking for a loan, because many of them have small acreages. They are in the pioneer stage, and they have not made much this last year. In fact, in a large area there last year their

Grain
crops were completely frozen. Many of them had to burn them this spring in order to put in this year's crop. Now they find this year's crop in that area, or at least 70 per cent of it, under the snow. With a heavy crop lying there flat on the ground, their chances of salvaging it in the spring are small indeed. I have letter after letter from that area indicating that it would be doubtful whether the grain which is not swathed can be harvested in the spring. From practical experience I know that where you have a heavy crop of grain and it is lying flat on the ground, when spring comes and you go in with a combine to try to pick it up it pushes ahead of the combine, and there is nothing you can do with it. I have had to burn crops because of that situation, and I know that condition exists there.
These people have lost two crops, yet under this act the minister states that an entry will be made in the delivery book. They will not be able to meet the loan out of this year's crop, but they can never deliver a bushel of grain again until that loan is paid. Over the past two years they have accumulated debts to the storekeeper for living expenses, and they are in a serious position. I can assure the minister that this act is going to be of little value to them. Those cases are not just isolated instances; you will find this situation right across the whole northern part of Saskatchewan and in some areas in the province of Alberta.
I would certainly urge on the minister that, where there has been a complete crop loss this year and where nothing is salvaged out of the crop, these loans should not be repayable. I think something should be done about that matter. I also believe that something should be done in the act to state the rate of interest on these loans; because I am certain the banks are not taking any risk where they have the entry made in the delivery book of the farmer, and as to any grain that farmer delivers in the future the first charge against it is the repayment of this loan.
Many of these farmers have not even been able to pay their taxes. Yet before they can pay their municipal taxes they must repay this loan. It is not being fair to the municipalities. It is not fair to the storekeepers and pools in the area who have carried these farmers that this loan should be the first charge against any grain delivered. That is the only income these farmers have. In some cases this will be the second year they have lost their crops. In that area some payments were made under the Prairie Farm Assistance

Act last year. But in some cases the townships did not qualify because there was the occasional crop in the area that was extremely good and was harvested. Again this year the same condition applies. Some of the larger farms in those areas, which had combines, were able to harvest a portion of their crop; the yield was very good, and therefore disqualifies the whole township as far as P.F.A.A. payments are concerned. That is the only alternative the farmer has. The only credit he can get is through this legislation. The conditions the minister has placed in the legislation with respect to repayment are not giving a fair chance to the municipalities to whom the farmers owe taxes, or to the dealers in the areas, the storekeepers and other people who are carrying these people on their books.


Mr. Victor Quelch (Acadia):: Mr. Speaker, I think this proposal, purely as a federal measure, is fairly satisfactory. Of course there will be many farmers who will not be helped very much by it. They could only be helped by outright grants. I quite realize that if anything of that kind were to be done it would have to be in a measure different from this.
The government is right in bringing down this proposal to utilize the banks rather than the wheat board or the elevator system. It would be a great mistake to try to get this done through the wheat board. I believe that board runs into enough criticism as it is without embarking on a program of helping to finance the harvesting operations of the farmers. I would say that the vast majority of the criticism of the wheat board today is unjustifiable. It is criticism that is made because the people who make it do not realize the true situation. Personally I think the wheat board has done a magnificent job. I believe a great deal of credit is due to the board for the way they handled the farmers' wheat, especially under very difficult circumstances.
In so far as the $5 million is concerned, I have heard some hon. members say they do not think it is enough. Personally I believe it should be enough. Of course it all depends on whether or not the banks endeavour to get the farmers to take loans under this measure instead of making loans in the usual manner If under this legislation they are going to grant loans to the farmers who would normally be obtaining loans as a matter of general banking practice, then it is quite possible that the full amount of money may be used up by farmers who do not need to borrow under this scheme. That is something we should safeguard against, and I mention it as something that I think should be watched. In so

Grain
far as the losses are concerned, I do not believe that they will be very great. As the legislation is worded there seem to be ample safeguards, and I do not suppose for one minute that the banks are going to make loans to farmers whom they consider to be absolutely uncreditworthy. If a farmer has a reputation of not meeting his obligations I doubt very much whether he will get any help under this legislation, in view of the fact that the banks are handling it. I am not even saying they should. If they have built up that kind of a reputation, then I doubt very much whether they should be eligible under this legislation.
So far as the district in which I reside is concerned, I have found that the banks are perfectly willing to make loans to all bona fide farmers under the farm improvement plan. Under a scheme of this kind it should be far easier for the banks to make loans than under the farm improvement loan scheme, because the guarantee is that much greater. However, I have one or two objections, one of which I mentioned when the legislation was in the resolution stage. I said then that I thought the $1,000 limit was too restrictive. I think some leeway could be given to the local bank to decide whether a loan should be $1,000, $1,500 or even $2,000. It all depends on the size of the operation. For a small farmer, $1,000 should be ample. But if the man is farming on a fairly large scale and has perhaps his total crop unthreshed and under the snow he will need more than $1,000. Yet I take it under this proposal the hands of the banker are tied. He is not in a position to make a larger loan than $1,000. That would be one of my main objections to it. I think the government could give the bankers a little more leeway on this question. I realize the government may be afraid that if that is done the banks may be making too large loans to farmers who really do not need them, and then in cases where the loans are really needed the banks would find that the amount of the guarantee had been exhausted.
Then there is the question of the interest rate. Under a scheme of this kind, where there is a 25 per cent guarantee, I cannot see why the interest rate should be higher than that under the farm improvement plan, namely 5 per cent. Surely that should be ample. I think it should be so written in the legislation. If it were written in the legislation that the rate of interest was to be only 5 per cent then you would deter the bankers from trying to act under this scheme instead of lending money under the normal banking practice. If under the normal banking practice they were getting 6 per cent, they would sooner lend money at 6 per cent than advance money under this for 5 per cent; but if you
are writing nothing into it, but letting them charge the same rate under this scheme as under the normal banking practice, then they will try to get the farmer to borrow under this scheme because they have the 25 per cent guarantee. Therefore I think the 5 per cent rate of interest should be put into this legislation. As I say, that would deter the banks from lending money under this scheme to people who should be able to borrow in the normal way.
I think generally speaking the proposal is quite good, but a little bit late. However, I am certainly glad the government has decided to use the chartered banks rather than try to utilize the facilities of the wheat board.


Mr.  G. M. Ferris@Mackenzie: I should like to say a few words on this bill. I think it affects my constituency more than any other in Saskatchewan. I should like to compliment the minister. I want to thank him for going out to western Canada and investigating the case, and I should like to say how pleased I am to see this bill brought down.
In the northeast part of the province of Saskatchewan we have a population that is just starting in farming. It is really and truly a pioneer country, starting in to make one of the best sections to be found in western Canada. These areas where they are farming are a long way from banks. I am not going to say anything against putting the loan through the bank, but I should like to see something in the regulations stating that if a farmer has from 20 acres and up under the snow the banker has no right to turn him down. He should get his loan. The guarantee is sufficient to take care of that. Some hon. members down here do not just realize what a permit book is, what it really means. It shows every bushel of grain that is marketed and every acre that a farmer has under cultivation. There is no reason for any loss, and I do not think there should be any.
This is not the only time we may have to come to the government of Canada and ask for some form of protection in our country. We in western Canada have been good to Canada. We have produced enormous amounts of grain, large numbers of cattle and quantities of animal products. We have produced these; we have done our share to help the economy of Canada, and there is no reason why there should be any kick against this bill. There is no reason why we should not have this help at this time. There is no reason why a bank should not render service to an individual who is in difficulty. A former speaker said he was glad to see the loans being put through the banks. To some

Grain
extent I am, too; but I also appreciate something else. I appreciate our one great organization in western Canada, and that is our wheat pool.
When the minister was speaking the other day at the resolution stage he said the wheat pool was willing to co-operate, and that if there was any loss they were willing to pay part of it. I ask here and now: why did not all the grain companies of western Canada offer to do that? We have looked after them; we have given them good dividends; we have done the right and proper thing so far as the elevator companies in western Canada are concerned. There is no reason in the world why they should not all have come forward and said, "We are willing to render a slight service to the people of Canada, to the government of this country".
If that had been done there would have been better co-operation in my part of the country for the simple reason, as one speaker said-I think it was the hon. member for Melfort (Mr. Wright)-that some of the farmers are fifty miles from the banks. In my constituency some of them are sixty or seventy miles away. When they get to the bank, the banker will look at them in a very discouraging way. Their assets are not very great. They may have only seventy-five or a hundred acres broken, at the very outside. And in passing let me tell the house that during August and September there were only nine days when we did not have rain in that northeastern part. That is a very serious situation.
No one up in that country is looking for a handout. We do not want handouts. All we want is fair play. We want to see the banks play fair with the farmers who have had the small crops.


Mr. H. R. Argue (Assiniboia):: Mr. Speaker, the remarks of the hon. member for Mackenzie (Mr. Ferrie) are most significant ait this time. Because this problem affects his constituency so vitally, I believe the hon. member is beginning to realize the possible shortcomings of the measure before us. He mentioned that the small farmers might have difficulty getting loans from the bank. I agree with him that the wheat pool organization could have handled this measure, and that the elevator companies should have offered to go along with the wheat pool in that regard. Local wheat pool agents and the agents of other elevators are at every delivery point. They know the circumstances of the farmers. They are close to the situation, and in my view they could have handled this particular type of assistance for farmers in a better manner than is provided in this legislation.
[Mr. Ferried
As the minister has said, I think it is clear that the government is risking very little in this legislation by way of guarantee. The maximum loan a farmer can get is $1,000. If he has already delivered $1,000 worth of grain, he cannot get a loan. If he has delivered grain to an amount less than $1,000, the value of the delivered portion is deducted from his loan. The amount of the loan is entered on his permit, and when the farmer delivers grain to the elevator the full price of that grain is deducted for payments on his loan.
I, for one, hope the farmers in western Canada will not have to use this measure. I know that if I, as a farmer, needed money I would think twice before putting myself in the financial strait-jacket represented by a loan under this measure.
Other hon. members have staid that the full amount should not be deducted as the farmer delivers his grain. I think perhaps a percentage should have been deducted. If a farmer has $1,000 worth of grain out under the snow and has threshed no grain, and receives a loan of $1,000; then, although I am sure the farmer will do his best, what incentive has he to go into more debt to get that $1,000 worth of grain out of the snow, when he will not receive any cash when he markets the grain? I believe there should have been a percentage, perhaps to the extent of 50 per cent or even more, if the minister had wished to do it in that way. But when a farmer gets a loan under this legislation, surely a portion of the proceeds from the sale of his grain, when he markets it subsequently, should go to the farmer, and a portion to the bank, not the whole of the money to the bank as is provided in this legislation.
I am sure the banks will be happy about the measure. They are going to be able to lend millions of dollars with absolutely no risk. The farmers are tied in a strait-jacket. Unless they quit farming or die they are going to have to pay the whole sum, and pay it in short order.	[DOT]
The minister has said that the government is risking little or nothing by giving this guarantee. One would think there was no emergency in western Canada at all, after reading this bill. I was glad that when the people of Winnipeg, Rimouski, Cabano and the Fraser valley faced emergencies the government came through with some money for their help. I believe if the Minister of Agriculture (Mr. Gardiner) had been handling this measure he would have brought in something better. From the discussions he had in Saskatchewan I believe he had another plan in mind, and that it was a better plan.

In. Saskatchewan, Manitoba, Alberta and :he Peace river country the Prairie Farm Assistance Act applies. If there is a widespread crop failure farmers receive some money without any necessity whatsoever of repayment. If there had been an amendment to the Prairie Farm Assistance Act whereby a farmer who, in the spring, has to burn his crop or plow it under, would get even $2.50 per acre as provided under that act, he would receive more actual benefit than he can under this legislation.
As the hon. member for Acadia (Mr. Quelch) has said, $1,000 is not very much money in this day and age. The amount of the loan should have been higher. I believe it should have been at least $2,000. One farmer who will have difficulty under this measure is the one who has already harvested and delivered $1,000 worth of grain. I know that farmer, in common with all others, will have spent the $1,000 long before the grain has been threshed. No doubt he has paid part of it to the municipality for taxes, part of it for groceries, part for gasoline and repair bills in the local town, and part to meet other obligations. The man who has threshed $1,000 worth of grain is probably broke today. If he has another $1,000 worth of grain out under the snow he will not be able to obtain any assistance under this measure.
As I have said already, I hope the farmers of western Canada will not have to avail themselves of the provisions of this measure. I hope they will be able to get the ordinary type of bank credit, or that they will be able to get credit through their credit unions. If a farmer gets credit under this legislation he places himself in a financial strait-jacket until the loan is repaid. The banks are risking nothing under this measure; they stand to gain. The government is risking very little.
The situation faced by many farmers is an emergency, and I think in the main they would have been better pleased had the government considered this to be a real emergency and provided some actual financial assistance. The least the government could have done in this emergency was to arrange to pay the interest on these emergency loans, at least for eight months.


Major James William Coldwell: Mr. Speaker, I am glad that when introducing this bill the minister made it quite clear that this is nothing in the nature of a handout.


Clarence Decatur Howe: Quite.


Major James William Coldwell: The government is well protected; the banks are well protected, and the western farmers are going to meet their obligations in the manner in which they have always met them.
Grain


Clarence Decatur Howe: Mr. Speaker, the leader of the C.C.F. (Mr. Coldwell) has described the situation exactly. The purpose of the bill is to place farmers who have for one reason or another been unable to deliver any grain in the position they would have been in had they been able to deliver one thousand bushels. We were asked for this legislation; a number of hon. members stated the position in their own constituencies and said this type of relief was needed. At the same time they made it very clear that they did not want a handout. In other words they did not want any loan treated as disaster money, as the hon. member for Assiniboia (Mr. Argue) wishes to treat it.
It is not that kind of help that is needed in western Canada. We have had the largest total crop of grain in western Canada in our history. Some time before next spring about 97J per cent of that grain is going to be harvested and marketed, and there is going to be more money in western Canada at that time than probably there has been from any single crop. That is the situation; it is not a disaster situation. However, it is a calamity for those farmers who have not been able to harvest any grain or who, if they have harvested, for some reason or other have not been able to deliver any grain. The problem was to make it possible for those farmers to be in the same position as though they could deliver 1,000 bushels of grain. We will do that by advancing $1,000 against grain in the fields or in storage.
The suggestion has been made that the operations of many farmers are too small and they will not be able to take advantage of this legislation. Each farmer has in his possession a document which shows his exact position, his delivery permit book. It shows his seeded acreage of each type of grain. If that permit book is brought to the bank and it shows that he has a certain acreage and has not delivered any grain, he is able to make out a prima facie case for obtaining a loan. It will be quite easy for a bank to check up on the position in that district. A banker can telephone the country elevator operator or go out and look at the farm himself. Unless he has good reason to believe that something has happened to that grain which is not general over the district, he is pretty well bound to make a loan.
The bankers whom we met accepted that responsibility. I may say that they were not keen to take on this business, but they accepted it as a public service, knowing the

Grain
obligation that was upon them to do the job in the manner in which the government expects it to be done.


Major James William Coldwell: Was there any discussion about the interest rate?


Clarence Decatur Howe: Yes. We had in the bill no later than three or four days ago a clause setting the interest rate. The hon. member for Acadia (Mr. Quelch) said that if the standard rate was 6 per cent in a district and this measure specified 5 per cent, the banker would be trying to lend at the 6 per cent rate instead of at the 5 per cent rate. There would be the converse situation in which a man paying 6 per cent on a normal loan might borrow under this arrangement at 5 per cent. He would be under the temptation to pay oft his loan at 6 per cent and substitute the second loan.
After a great deal of study we decided that the only practical thing was to accept the interest rate in the district. It varies. The rate we had in the bill at one stage was not greater than 5| per cent. We were assured by the committee of bankers with whom this transaction was negotiated that the rate would not exceed 5J per cent in any district, and that in some districts it would be lower than that. It will be the prevailing rate for that type of loan in the district. After a great deal of study we came to the conclusion that we had better adopt the rate in the district for the type of loan that is covered by this measure.


Mr. Fair:: That means the rate will not exceed 5 per cent?


Clarence Decatur Howe: Five and a half per cent. We were assured of that by the banks, although there is nothing in the bill that makes it mandatory. Reference has been made to farmers who might be some distance from a bank. That situation arises more often in Saskatchewan than in Alberta. In Alberta there is good coverage by the banks, but I believe that in Saskatchewan there are many farmers fifty or sixty miles from the nearest bank. However, most producers have some kind of conveyance and a trip of sixty miles and return to get $1,000 would not seem to be too far. I do not think that is an insurmountable difficulty, although it is regrettable.
I wish some more convenient system of distributing this money could have been found. Although other ways were explored we met with a few disappointments and decided that using the banks would be the most feasible way of doing the job.
I will admit there was no intention that great risks should be taken. We are advancing money against good security. It is intended

to be a short-term loan. As the security is realized we intend to collect the money. The chief purpose we sought to achieve was to place every farmer in as good a position as he would have been had he been able to deliver 1,000 bushels of grain in the normal way.


[Stage Direction]
Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Dion in the chair.
On section 1-Short title.
Percy Ellis Wright: I want to say something of a general nature on section 1. I agree with the Minister of Trade and Commerce that in a great number of areas in the west this bill will do a reasonably good job, but in at least a part of the area I represent and in a large part of the area represented by the hon. member for Mackenzie many small farmers are a long way from banking facilities, and it is not going to do a job. Just imagine if you were in the position of one of these small farmers who has 100 acres of grain. In most cases it is less than that. Let us say he has 50 to 100 acres. He goes to the bank and gets a loan of $1,000. That loan will carry him over the winter. Then he is faced with the proposition of harvesting his crop in the spring; and he wants to go to the dealer and get certain supplies for that purpose. The dealer knows there is already a loan of $1,000 against the crop which must be paid before he can get one cent for the gas or anything else he advances to the farmer for harvesting the crop. How is he going to harvest that crop? I should like the minister to answer that. Many small farmers would like an answer.


Clarence Decatur Howe: I assume the hon. member is speaking of a farmer who only grows $1,000 worth of grain.


Percy Ellis Wright: Many of them only have a small acreage in grain.


Clarence Decatur Howe: We will talk about a farmer who only grows $1,000 worth of grain. We will assume that in a normal season he is able to market his grain in the usual way; he brings it to the elevator and gets $1,000. What does he do in that case?


Percy Ellis Wright: He also has his other payment coming in the spring.


Clarence Decatur Howe: He has that under this arrangement itoo.


Percy Ellis Wright: No, he has not.


Clarence Decatur Howe: Yes.


Percy Ellis Wright: No, because he has not
delivered any crop and he has no further

payments in the spring. If he has any payments coming in the spring they are already hypothecated to pay the loan.


Clarence Decatur Howe: No, he will get his further payments this year. The only security we get is the initial delivery.


Robert Fair: It has been suggested that a farmer who has delivered $1,000 worth of grain cannot get any further credit under this legislation. In my opinion that is not correct. What is the correct answer?


Clarence Decatur Howe: That is correct. If a farmer has obtained $1,000 by delivering grain from this crop he is ineligible for further credit.


Robert Fair: I do not think that is very good business, because many people have very heavy expenses. The fact that they deliver a thousand bushels of grain and get an interim payment on it will not begin to pay the expenses incurred by many farmers. I think the $1,000 credit will not be sufficient.


Hazen Robert Argue: I should like to follow up the minister's illustration of a moment ago with respect to the small farmer who ordinarily would thresh $1,000 worth of grain. He can apply now and get a loan of $1,000, but there is no assurance that that farmer will in fact be able to harvest his crop next spring. I believe the vast majority of the crop will be harvested, but if a man has a low-lying farm subject to floods the whole crop may be wiped out. If there is a wet, damp spring weeds will come up through the standing grain or through the swamp. I know that thousands of acres were burned over in my area in the spring of 1943 following the fall of 1942 when we had a situation such as we have now. If 50 per cent, shall we say, of the grain delivered on the permit book were allocated to the payment of this obligation the farmer would then have a little cash with which to go to the storekeeper and oil dealer and secure some supplies for spring operations. The minister has said-he is always an optimist and is very often right- that he expects about 97J per cent of the grain will be harvested. I take it he means acreage. I think much more than 2J per cent of the grain is lost now. However, he says that he expects 97J per cent of the crop will be harvested. I hope the minister is right, and I think there is a good chance that he will be right, but the 2J per cent that remains unthreshed will mean the whole crop for a lot of the smaller farmers.
Under this measure the 2i per cent of the farmers who are unable to harvest their crop even in the spring will be able to get an advance of $1,000. Then they will be tied up for $1,000 worth of next year's crop. I should 'ike to see, although I do not think
Grain
the time is ripe for it now, an amendment to the Prairie Farm Assistance Act which might bring the provision I wish to suggest into effect at the end of July next year. An inspection could be made then of the farms to ascertain which farmers had been unsuccessful in harvesting a large part of their crop. There are bound to be some farmers in that position. No farmer with a potential crop of 30 or 40 bushels an acre will forget about harvesting it in order to get some help under the Prairie Farm Assistance Act. However, if because of bad weather conditions next spring certain farmers are unable to harvest their grain, I think in an emergency like that an amendment should be made to the Prairie Farm Assistance Act to provide for payment to them of $2.50 an acre. It is not very much, but for the small farmer in the constituency of the hon. member for Mackenzie, shall we say, who next spring is unable through no fault of his own to harvest his crop, $2.50 an acre paid under the Prairie Farm Assistance Act would be of some material help. That is the type of emergency that I think the government should deal with.


[Stage Direction]
Section agreed to.
Sections 2 to 8 inclusive agreed to.
On section 9-Offences.
Robert Fair: You are going very fast, Mr. Chairman, and before you get away from us I should like to say something about clause 9.
I think subsection 1 (a) is all right but subsection 1 (b) reads:
A person who makes any other statement in his application that is false in any material respect . . .
I should like to see the word "knowingly" inserted before the word "makes". In many cases farmers may unintentionally make some statement that would get them into trouble under this clause, If we add the word "knowingly" it will relieve that situation. I am not sympathizing with the person who knowingly makes a false statement, but having been in banks myself and having sat on the other side of the desk from the manager a good many times in the past, I know that in many cases the manager writes down the answers to his own questions without consulting the fellow on the other side of the desk. The word "knowingly" would protect the innocent farmer. I should like to see it inserted if the minister has no objection.


Clarence Decatur Howe: I have an objection. Whether false statements are made knowingly or not is a matter of conjecture. It is a very difficult fact to prove. I think any misstatement of fact would have to be a gross misstatement such as saying that he owned property he

Grain
did not own, or did not have a mortgage when he had, or something of that sort.


Robert Fair: I do not think a farmer would take the chance of doing that, because the banker knows his business much too well.


Clarence Decatur Howe: If that is the case probably the clause means very little because it would have to be a rather gross misstatement of fact.


Victor Quelch: I should like to draw the attention of the minister to the fact that in subsection 1 (a) you have the word "knows". The subsection reads:
A person who states in his application an estimated quantity of crops or grain or an estimated amount that he knows to be false.


Clarence Decatur Howe: Yes.


Victor Quelch: Why not say in subsection 1 (b), "makes any other statement in his application that he knows is false"? When it comes to estimating crops, it is going to be a pretty wise man who will be able to estimate what a crop will yield next spring. We do not know how much damage will result to the crop on the ground. It may only yield half what it was in the field.


Clarence Decatur Howe: That is why 1 (a) is worded in that way. It reads:
A person who states in his application an estimated quantity of crops or grain or an estimated amount that he knows to be false.
For instance, a man may come in and say that his wheat goes 30 bushels to the acre and it may only go 20, but he may still be giving an honest estimate of what he thought that grain would yield. Therefore so far as the amount of the crop ,is concerned it is a case of knowing the estimate to be false. "Any other statement" refers to a statement of fact that is false, and not an estimate. I think there is a distinction between the two.


Victor Quelch: He is not required to make any statement about whether he will harvest before seeding. He may intend to do it, but on account of weather conditions and so on he would not be able to do it.


Robert Fair: What sort of statement is covered by section 9, subsection 1, paragraph (b):
Makes any other statement in his application that is false in any material respect;
What would that cover?


Clarence Decatur Howe: He may say that he owns grain, whereas he may be only a tenant farmer and entitled to only the tenant's share of the grain. He might make any other statement about his position that would be false.


Robert Fair: That would be deliberate.


Clarence Decatur Howe: Yes. I cannot think of anything else. In any question that involves judgment we say that if he knowingly makes a false statement, then he must be guilty. If he makes a statement of fact, then the fact must be accurate.


Robert Fair: The minister will cover the situation by placing the word "knowingly" in that section. I do not suppose the minister would mind adding an additional word to make the bill quite clear. We have made changes in some of the other legislation we have had before us.


Clarence Decatur Howe: I am afraid it would not apply in this case.


Percy Ellis Wright: What is the position of the landlord and tenant under this bill? Is it the tenant who will make application for the loan? What happens to the landlord's share of the crop; is that hypothecated on, the loan?


Clarence Decatur Howe: That is a matter for the bank to sort out. Of course only the tenant would be entitled to make application for a loan. The landlord is not entitled to make application, and the security of the tenant is something the bank must work out. I suppose the tenant could only borrow on his interest in the grain.


Percy Ellis Wright: What action is taken in a case such as I am going to describe? I know that a good many farmers are optimists and really expect they are going to harvest their crop. Suppose a farmer says he has a crop that will yield about 30 bushels to the acre. He finds when he starts to harvest his crop in the spring that it is impossible to operate his machinery. He made a statement that he intended to harvest it, and he tried to do so. Will there be any action taken where a farmer is unable to harvest his crop because of reasons over which he has no control?


Clarence Decatur Howe: In a case like that, it has to be proven that he intentionally made a statement that was false.


Victor Quelch: Consider the case of a tenant who receives two-thirds of the crop. When he delivers his grain in the spring the bank will be able to insist on repayment from two-thirds of that crop on the loan they have made. Would there be any demand made on the other one-third?


Clarence Decatur Howe: I would not be too specific, but I would think that two-thirds of the crop would be applied against the loan, and the other third would be turned over to the landlord.


Victor Quelch: But if the proceeds from two-thirds of the crop are insufficient to meet the

loan, the bank would not be in a position to take the other third in order to liquidate the loan.


Clarence Decatur Howe: No.


[Stage Direction]
Section agreed to.
Sections 10 to 14 inclusive agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the bill be read a third time?


Clarence Decatur Howe: Now.


Clarence Decatur Howe: the third reading of the bill.


John Horne Blackmore: Before the bill is read a third time, Mr. Speaker, I wish to say a word or two for my own section, No doubt conditions vary considerably throughout the two provinces of Alberta and Saskatchewan. In a large part of my constituency this measure is going to be of very little value. As I indicated in my speech of December 10, the losses there are almost as great as would be occasioned by a hail storm. It is doubtful that much of the grain in the western part of my riding will be capable of being harvested. Conditions are a little better in the southern and eastern portions, because there they did get some grain. I would imagine that all the way up the eastern foothills of the Rocky mountains there will be found conditions somewhat resembling those which obtain in my own riding. I believe the government should take more definite measures than those appearing in this bill.
Some steps ought to be taken to reward the people in those parts for the amount of money they have contributed under P.F.A.A. They have been making payments under P.F.A.A. ever since 1939. They have paid a lot of money in, but they have not received a cent in return because in that area they rarely lose enough of their grain to qualify for payments out of the fund. This area generally produces good crops. Heavy losses were substained there, as a result of the money which was stolen from the farmers of western Canada under the U.K.-Canadian wheat agreement. The losses were heavy because these farmers sold a lot of that grain. As I said the other night, I believe they should receive better treatment than this bill offers. I really believe that the minister, after having this bill passed, ought to begin to think of something a little better than this to aid the people in these grain growing areas.
Motion agreed to and bill read the third time and passed.
Agricultural Products Board



AGRICULTURAL PRODUCTS BOARD TO PRESCRIBE THE CONSTITUTION AND POWERS OF THE BOARD, AND TO PROVIDE FOR NECESSARY EXPENDITURES

Right Hon. J. G. Gardiner (Minister of Agriculture) moved: the second reading of Bill No. 18, to provide for the establishment of an agricultural products board.


Mr. Charlton:: Is the minister going to make a statement?


James Garfield Gardiner: Mr. Speaker, the bill was thoroughly discussed in the resolution stage, and I do not know that there is anything I can add at this moment by way of discussing the principle of the bill. I feel I covered that very fully when we were in the resolution stage. I believe we could spend our time to better advantage at this stage in committee, where information could be asked for by members who so desired, and I am in the position to give information. I doubt very much if I could use the time to best advantage by repeating what I said before. I should like to move second reading at the moment and if there is any general discussion to listen to it and then go into committee as soon as we may so the information which members desire can be obtained.


John Alpheus Charlton: It is
not my intention to take up much of the time of the house now, but I want to make a short statement about this bill. I realize to some extent the necessity for legislation of this type, since it will be more or less a stopgap due to the lack of producer boards in the country at this time. I should like to have the minister's assurance-and I think he can give it to us-that this board will not be used to discourage the setting up of more producer boards, or to work in competition with or to the detriment of any producer board now in existence. That is all I want to say at the present time, but I should like the minister to give us that assurance, namely that it is not going to work to the disadvantage of any producer board now in operation and that it will not work in opposition to or in competition with a producer board that may be organized in the future.


Hazen Robert Argue: Mr. Speaker, the bill before us empowers the government to establish an agricultural products board. While the bill empowers the governor in council to direct that board to do a number of things, such as purchasing food products in Canada for shipment to overseas countries and the buying and selling of agricultural products within Canada, it seemed to me that the main or the first purpose of the board would be to handle the imports of butter into Canada in the coming months.

Agricultural Products Board
When we were discussing the resolution preceding the bill the position of the members of the C.C.F. group was that we supported the bill; we are pleased to give the Minister of Agriculture (Mr. Gardiner) another board if he thinks he needs it. At that time, however, we said-as we have said in this house in the past-that in this measure a formula should be provided for the establishment of floor prices.
In the debate the minister said the policy of the government in establishing floor prices was to establish them on the basis of the same price-cost relationship that prevailed for agricultural products in the years 1943 to 1945. As reported at page 997 of Hansard, in reply to a question asked by the hon. member for Acadia (Mr. Quelch), the Minister of Agriculture went on to attempt to demonstrate to us how the government's formula had applied to the dairy industry. The minister took the present prices of milk and said that the price today is higher than the price based on the formula. He made the same statement with regard to cheese. He said the present price is higher than the price would be based on the 1943-45 price-cost relationship. As reported at page 991 of Hansard the minister made this admission:
Then, coming to butter the figures are 100 and 152. That is the low one. And when some say that butter is one of the lowest priced foods in Canada today, they are perfectly right. Taking 100 as the basis for 1943-15, the index for butter is 152.
The minister had already, prior to that, stated that the cost index today was 160. In that statement the minister admitted that the government's legislation does not provide a floor price based on parity with the same price-cost relationship as that which prevailed from 1943 to 1945. There is under milk no floor price established by this government. There is no floor price under cheese. The minister's argument therefore has no bearing when he gives us these prevailing prices for milk and cheese. The one thing under which the government has a floor price is butter; and the minister admitted that the floor price is below his own formula and that butter is one of the low priced commodities in Canada today.
There are three farm commodities today under which support prices are provided by the government. The first I have mentioned, namely butter. The minister himself says that butter prices are low and that the formula is not being applied to butter because the price is lower than the price-cost relationship, based on 1943-1945.
The government has a floor price under eggs of 38 cents a dozen for grade A large at Montreal. Taking 1943-1945 as 100, the minister said the farmers' cost of production

index today is 160. In 1943-1945 the prices of eggs varied from a low of 34 cents a dozen in April 1943 to a high of 48 cents a dozen in the winter of 1944-45. I have worked out the average price for eggs in that three-year period and, on the statistics I obtained from the Department of Agriculture, I get an average egg price in 1943-45 of 38 cents a dozen. The floor price today is exactly the same as that which prevailed in 1943-45, yet the cost of production, on the basis of the minister's own statement, has gone up 60 per cent.
If the minister had a formula written into legislation the floor price under eggs should be not less than 60 cents a dozen for grade A large. That is what is wrong with the minister's legislation. The minister says there is a formula, but there is no formula. He says: Oh, we make checks and we go over the statistics. But the minister has not applied to the price of eggs a parity floor based on his own suggested formula of the price-cost relationship that prevailed in 194345. Because of the fact that there is not an adequate floor, we find farmers going into and out of the production of eggs periodically, with the result that sometimes there is a high price for eggs and sometimes the price for eggs is extremely low. On perusing the Saskatoon Star-Phoenix I noticed that in one morning-I believe it was about two weeks ago-in Saskatoon the price of eggs to the producer dropped 14 cents a dozen; it dropped 6 cents at one stage and 8 cents at another. How can any producer operate with any degree of certainty as to what his return for eggs will be when he finds the price of eggs dropping 14 cents in one morning? I think the floor price for eggs should be raised. I believe that a higher floor price would encourage production, would to a large extent iron out the peak in egg prices, and that as a result there would be a more stable price to the consumer and to the producer.
The hon. member for Selkirk (Mr. Bryce) has, during this session, gone over the serious drop in the price of hogs that has taken place in Canada during the last few months. In the figures he placed on Hansard at page 912, he pointed out that at Winnipeg in July hogs were an average of $37.75 a hundredweight

that was for grade A hogs, I believe-and that the price had dropped to $28 in the last week of October. Since the last week of October the price of hogs has taken another drop. On December 3 the price at Winnipeg was $26.50 a hundredweight. In other words, from July until early December the price of hogs to the farmer dropped by 30 per cent. That is not

providing stability for the hog producer. A situation like that is most unsatisfactory. The government has a floor price on hogs of $32.50 a hundredweight for Wiltshire sides.


James Garfield Gardiner: May I ask the hon. member a question? Why does he not finish the story? Why does he not give us the price for last week and this week?


An hon. Member:: He does not know.


Hazen Robert Argue: The minister can do that, and ' I doubt very much whether he will And that the price has gone up very much. I have not checked the papers recently.


James Garfield Gardiner: The price went up a cent each week.


Hazen Robert Argue: I have not checked the papers for a few days, but when I looked at the last quotation in the Winnipeg Free Press in the reading room some two days ago that is exactly what the figures were. If the minister has any later figures that have come from Winnipeg in the last two or three days I will accept them, but I am certain that they are not much higher than the $26.50 I have quoted.


James Garfield Gardiner: The price went up a cent last week and another cent this week.


Hazen Robert Argue: That is fine; that puts the price back to where it was in the last week of October, so the 30 per cent drop is now a 25 per cent drop. The price of hogs is going up and down so fast that I cannot keep track of it. Neither can the farmer keep track of it, so finally he throws up his hands and says: "I do not know what I am going to get for my hogs, but I still think I might just as well go out of hog production". There is no encouragement for hog production when the minister and the government have set the floor price so low that the price of hogs can drop to $26.50 a hundredweight; and that is for dressed carcasses, not for Wiltshire sides.
As the hon. member for Selkirk (Mr. Bryce) has said before in the house, the price to the consumer has not changed at all. The fact that the price to the farmers has gone down in the short period of a few months from 25 to 30 per cent no doubt caused the farmers union of Manitoba, as reported in the Ottawa Citizen of December 13, to call upon the government for an immediate investigation into the Canadian packing industry with a view to its nationalization. The farmers union of Manitoba is fed up with the packing industry that encourages this type of price fluctuation, and asks the government for an investigation into that
Agricultural Products Board industry with a view to nationalization. The Canadian Press dispatch goes on as follows:
The resolution claimed present prices paid farmers for livestock have "not brought a like downward trend in the price of meat to consumers of whom we are a part."
There was no benefit to the consumer, even though the price to the producer went down 30 per cent. There is no stability for the egg producer. There is no stability for the bacon producer. We can produce more eggs in Canada; we can produce more bacon; we can produce more food of all kinds; and surely at this time when we are engaged in a worldwide struggle with communism, one of the best things we could do to sell our democratic way of life to nations throughout the world would be to provide food supplies to the best of our ability to underdeveloped countries.
I received a very interesting answer, I thought, to a question I placed on the order paper on November 4. The question read as follows:
What was the quantity and value, in each month, of wheat, other grains, livestock, agricultural machinery, industrial machinery, and any other commodities made available to (a) each country under the Colombo plan, since its inception; (b) any other country, by way of economic assistance, during the past eighteen months.
To me that looked like a pretty complicated question, and I had no doubt the government departments would have to go to a lot of work to dig up all these statistics in detail. Therefore I said nothing in the house as to why the answer to that question was delayed. The question was asked on November 4; the answer came down on December 11, some five or six weeks later. What was the answer? It reads:
Under the Colombo plan the only definite commitment so far made was to India for wheat to the total value of $10 million.
The answer to that question was known immediately I put the question on the order paper. It was a short answer, and could have been made within forty-eight hours. The answer goes on:
This leaves $5 million available to India in this fiscal year. The other obligation is to Pakistan to which country $10 million has been allotted this year.
To the other part of the question the answer is:
Ten million dollars loaned to the government of the United Kingdom under the provisions of the United Kingdom Financial Agreement Act, 1946.
In other words, even though Canada is capable of producing much larger quantities of foodstuffs of all kinds than we are producing at the present time, the government does not give encouragement to our agricultural producers through proper floor price legislation, and does little or nothing in the

Agricultural Products Board way of providing assistance to underdeveloped and backward countries. The government should do what the minister says it is its intention to do, namely provide a formula for floor prices for agricultural products. I accept the minister's suggestion that the formula might be on the same price-cost relationship as prevailed from 1943 to 1945. During that period I do not think farm prices were particularly high. Farm costs were not particularly high, either; so that the 1943-45 relationship might represent a formula on which a floor price could be based. The minister may say: Suppose we get a surplus? Suppose we get a greater quantity of production than we can consume in Canada? I would say that is all to the good. If we could produce more eggs and more bacon than we can consume in Canada, many of the western European nations-and I am thinking particularly of the United Kingdom-would welcome Canadian eggs and Canadian bacon. Foodstuffs of all kinds would be welcomed in the poverty-stricken nations of southeast Asia. One of the best contributions Canada could make to the establishment and the promotion of democracy throughout the world and the maintenance of peace would be to ship larger quantities of food to European countries and countries in southeast Asia, because I feel Canada could and should produce more. If necessary let us give the commodities away. I think that is one of the best things we could do if we really believe in promoting democracy. One of the best ways to increase production is to write into our legislation a formula for the provision of adequate floor prices to our producers. Because I believe such a formula is absolutely necessary I wish to move an amendment to the motion for the second reading of this bill, Mr. Speaker, seconded by the hon. member for Selkirk (Mr. Bryce):
That Bill No. 18 be not now read a second time but that it be resolved that in the opinion of this house consideration should be given to the introduction of legislation providing for the establishing of floor prices at such levels as to guarantee to producers a price-cost relationship not less favourable than that prevailing in the period 1943-1945.
The minister says it is the intention of the government to provide floor prices on that basis. But that is not being done. All I am asking the government to do is to write into our farm legislation a formula which will provide a guaranteed floor price for agricultural producers, based on a parity formula such as I have mentioned.
If that were done, we would get increased production. If we had increased production there would be a lot less likelihood that we would have the very high prices consumers have to pay during certain periods of the year. If we stimulated production to a point
(Mr. Argue.]
greater than consumption in Canada I think we should be all the more pleased, and we should make available that increased agricultural production to the peoples in other nations of the world.


Victor Quelch: Mr. Speaker, we in this group believe that this bill to provide for the establishment of an agricultural products board, together with the Agricultural Prices Support Act, provides the machinery which can-and I use the word "can" , advisedly-stabilize the prices of farm products at a fairly satisfactory level. And when I say "a fairly satisfactory level" I mean a level which bears a fair relationship to the prices of other commodities.
For a long time farm organizations have been asking for a formula to be established for the purpose of setting floor prices. When this measure was in the resolution stage the Minister of Agriculture (Mr. Gardiner) did tell the house what kind of formula the government is using at the present time. He stated that under the government formula floor prices would be maintained at such a level that the prices of agricultural products today would bear the same relationship to the price of other commodities that existed in 1943-45.
As the hon. member for Assiniboia (Mr. Argue) has said, the trouble is that that is not written into the Agricultural Prices Support Act. If it were, then I think it would safeguard the farmer against a similar occurrence to that of the thirties, when the prices of farm products fell by over 65 per cent at a time when the prices of other commodities fell to the extent of only 25 per cent.
Have we any assurance that if such a situation developed floor prices would be maintained under the formula outlined by the Minister of Agriculture? If that formula were set out in the Agricultural Prices Support Act we would have that assurance. But in view of the fact that there is no formula in either this measure or the Agricultural Prices Support Act, have we any assurance that if a serious drop in agricultural prices took place, a drop far below the price levels of other commodities, the government would carry out the formula outlined by the Minister of Agriculture? Or would the government then say that it would be too expensive to carry out that formula, and that therefore they would adopt another formula? The only assurance the farmer can have that that formula would be carried out is to place it in the act. Therefore I think the amendment of the hon. member for Assiniboia is good; only, unfortunately, I think it is an amendment to the Agricultural Prices Support Act rather than to the agricultural products board measure.

I know there are many people today who object to this kind of legislation. They say it is an interference with private business. But those very people who make that charge believe in insurance-and this is nothing more or less than a form of insurance. It is insurance against an undue fall in agricultural prices. And, mind you, it is insurance for which the farmers have already paid the premium, and a very heavy premium at that. Do not let anyone forget that in the depression years the farmers were taking prices far below the cost of production. They were told time and again they could not expect to get more than the world price. Yet when prices rose steeply during the war, price ceilings were placed on farm products. The government asked the farmers to take less than they might otherwise receive, and all this was done in the name of stabilization. The government promised that if the farmers accepted those prices, then the government would maintain the prices of agricultural products at a fair level after the war. While taking those lower prices the farmers lost millions upon millions of dollars. That is why I say they have paid their insurance premium for the insurance this measure provides.
Today we are told there is danger of serious starvation and famine conditions in many parts of the world, unless we can maintain production at a high level. We are told that today the increase in production is barely keeping pace with the increase in population. The food and agriculture organization have issued warnings time and again, and have stressed the fact that every nation must do everything in its power to maintain production at a high level. Yet today in Canada we find the farm population is decreasing. The younger people are leaving the farms and going to the cities, because they find that in the cities the wages are higher and the way of living is generally speaking easier. They have many conveniences in the cities that they do not have on the farms. Therefore we are having a great deal of difficulty in keeping the younger people on the farms. Today we find many farms being operated by people well along in years. One may well ask what will happen in the future, unless we can improve conditions on the farm so the young people will be willing to stay there.
If we want to keep food production at the highest level, then I think we must ensure that the increase in production in the future is not used as an excuse to force the prices of agricultural products down, as has been done so many times in the past. That has been the history of agricultural prices. Whenever we have had reserves of food the prices of commodities have gone down. And so the farmers have
Agricultural Products Board actually been discouraged from increasing their production because they have realized that if they did so they would be forcing prices down.
This measure, I believe, provides a means whereby the prices of farm products may be maintained. It provides a method whereby in the event of a surplus the government may make purchases, and either dispose of such surplus to foreign nations, or store it, or process it. I believe if the government utilizes this measure as it can be utilized, it could very well safeguard against any serious fall in prices. A surplus would then become a blessing and would be used in a year of scarcity to maintain the standard of living. As I say, the machinery is there. Most people are afraid, however, that the government will not make effective use of it in time of need.
One of the reasons for this fear lies in certain press statements we read. I must admit I was concerned by a statement that appeared in the Ottawa Citizen of December 6. This was headed "Government May Continue Food Floors," and it went on to say:
Agriculture Minister Gardiner wound up a two-day federal-provincial agricultural conference last night with the hint that the government is considering continuation of price support for eggs, butter and bacon in 1952.
Why the hint? That implies definitely that it is possible the government may not continue floors. Surely we should be able to feel confident under this legislation that floors will be continued next year. However, according to this, it is just possible that floors will be continued. No assurance is given. If this legislation means anything every farmer should feel confident that next year and during future years these floors will be in existence. It should not require a statement from the Minister of Agriculture (Mr. Gardiner) that the floors will be continued next year. If the formula outlined by the minister was placed in the Agricultural Prices Support Act all fear or distrust would be wiped out and we would know that this legislation really means what it appears to say.


James Garfield Gardiner: Mr. Speaker, I am speaking on the amendment, which has not yet been ruled out of order.


Stanley Howard Knowles: It was not ruled out the last time it was moved.


James Garfield Gardiner: It will probably be voted out if it is not ruled out.


Stanley Howard Knowles: No doubt. It was voted down before, with the minister's help.


James Garfield Gardiner: The amendment reads:
That Bill No. 18 be not now read a second time but that it be resolved that in the opinion of this house consideration should be given to the intro-

Agricultural Products Board
duction of legislation providing for the establishing of floor prices at such levels as to guarantee to producers a price-cost relationship not less favourable than that prevailing in the period 19431945.
As has been pointed out by the hon. member for Acadia (Mr. Quelch), this is not the bill which you would amend if you were going to make that provision. The suggestion was made, both in the debate on second reading and in the debate on the resolution, that we were dealing with floor price legislation. I corrected that statement at the time we were discussing the resolution, and I repeat that this legislation has nothing to do with the matter. I think the hon. member for Assini-boia (Mr. Argue) was out of order most of the time he was speaking on the second reading.
Section 9 (2) of the act which provides for floor prices provides the very thing which is suggested here in as plain language as could be used without setting up a formula as suggested by the hon. member for Assiniboia. This particular legislation does not do what has been suggested by the hon. member.
A moment ago the hon. member suggested that if the Minister of Agriculture wanted another board the house would be prepared to approve it. This bill actually does away with three boards and substitutes one in their place. It is not asking for another board. During the war and the transitional periods we had a board to handle dairy products, a board to handle meat products and a board to handle special products. This will constitute one board to take the place of those three.


Hazen Robert Argue: Is it not true that those three boards went out of existence on March 31 of this year?


James Garfield Gardiner: No, but those three boards will go out of existence as a result of what we are doing now. The three boards which were constituted during the war period were kept in existence until recently, and this is just a substitution. This board is being placed in a position to deal with matters that may be referred, to it, matters that were previously dealt with by the three boards. It is perfectly true that only one thing has been given to it to deal with up to date, the purchase of butter. That butter is being brought in from outside Canada. They have not dealt 'in any way with the setting of floor prices.
The statements made by the hon. member for Assiniboia could be refuted, but I would probably be out of order if I attempted to do that, just as he was out of order in discussing what he did under this particular measure. If the amendment which has been moved had been passed in connection with the other act

the facts would bear out by what has happened ever since the war down to the present time in relation to farm prices that what the member for Assiniboia contends should happen has happened. I have all the facts here in relation to it, and I can present them to the house. I do not think I would be in order to discuss them in detail now, but if hon. members desire to have the information I am quite prepared to give it when we get into committee.
I have information here which was prepared for the purpose of answering questions which have been asked within the last two or three days, and the statement I have in hand refutes one suggestion that was made with regard to eggs. It has been said by the member for Assiniboia that the price ought to be 60 cents per dozen if we are going to have a price which would bear out the suggestion made with regard to the relationship to earlier prices in 1943, 1944 and 1945. Actually the average price over the last eleven months at Montreal has been 67 cents, or 7 cents better than the hon. member says it ought to be.
One could go through the whole range of commodities and show a similar condition as having existed in connection with prices, but I say again that I do not think I would be in order to do that on the second reading of this bill. I suggest to you that the amendment really is not one which refers to this bill but rather to another act entirely, and as such should be declared out of order.


John Horne Blackmore: Were the prices at Montreal mentioned by the minister the prices to the producer or .to the consumer?


James Garfield Gardiner: The average wholesale market price for grade A large eggs at Montreal for 1950 was 51-5 cents per dozen and for the first eleven months of 1951 the average price was 67-4 cents per dozen. It was the wholesale price.


Percy Ellis Wright: Mr. Speaker, I would point out to the minister that the amendment is not worded in such a way a.s to ask for an amendment to this particular bill. It reads:
That Bill No. 18 be not now read a second time but that it be resolved that in the opinion of this house consideration should be given to the introduction of legislation providing for the establishing of floor prices at such levels as to guarantee to producers a price-cost relationship not less favourable than that prevailing in the period 1043-45.
That simply sets out the principle we want the government to accept, and which the minister has -at times said in this house they were prepared to accept. All this does is

give members of this house, including members of the minister's own party, an opportunity to show that they are behind: his placing in the proper legislation at the proper time a floor price which will give this guarantee to the farmers.
In the public accounts committee the other day the Minister of Finance (Mr. Abbott) stated that it was the duty of the government to maintain a suitable market for government bonds. Several years ago in this house, when I asked1 that there should1 be a floor of the par value under government bonds, that they should always be negotiable at par, Right Hon. Mr. Ilsley said that he did not believe it would be right to put that provision in the legislation, but no government would allow government bonds to fluctuate unduly. I say that if no government will allow government bonds to fluctuate unduly, then no government should allow the prices of agricultural products, the basic food of our country, to fluctuate unduly. It is just as great a responsibility to see that people are able to eat and that food is produced for them to eat as it is for them to maintain a stable market for government bonds, and in my opinion it is a great deal more important. All we are asking the government to do in this amendment is maintain stable prices for agricultural products so that our farmers will go ahead and produce as they can produce and as they have produced in the past. In 1944 we produced over 600 million pounds of pork products.


James Garfield Gardiner: On a question of order, I understood my friend was starting off to speak on a point of order in. reply to what I had said before, but if he is going to make a speech, which in my opinion is out of order, then I think we should have a ruling on the question of whether we are in order in discussing another measure on this measure. This bill is before the house, not the other act, and I dio not assume that when a measure of this kind is before the house, or any measure is before the house, we have the right to turn aside and discuss some other bill or act which is not related at all to the one under discussion.


Percy Ellis Wright: I am not discussing another act. I am discussing this bill, the purpose of which is to set up an agricultural products board. Surely one of the functions of the board will be to maintain orderly marketing in this country. Otherwise there is no object in setting it up. I am talking about orderly marketing of agricultural products, and I think that is very definitely within the scope of this particular bill. Has the minister anything to sgy to that?
Agricultural Products Board


James Garfield Gardiner: I am waiting for Mr. Speaker to give his ruling. I do not think I need to say anything more.


Stanley Howard Knowles: Are you ruling on the
discussion or on the amendment, Mr. Speaker?


Mr. Speaker:: I have read the amendment. It is submitted no doubt under the provisions of paragraph 657 of Beauchesne, third edition, which reads as follows:
It is also competent to a member who desires to place on record any special reasons for not agreeing to the second reading of a bill, to move as an amendment to the question, a resolution declaratory of some principle adverse to, or differing from, the principles, policy or provisions of the bill, or expressing opinions as to any circumstances connected with its introduction, or prosecution: or otherwise opposed to its progress; or seeking further information in relation to the bill by committees, commissioners, the production of papers or other evidence or the opinion of judges.
It seems to me that similar amendments moved in the last few years were allowed to stand. I have not had an opportunity of looking it up yet, but in view of that I would hesitate to rule the amendment out of order at this time without at least looking up the amendment moved previously.


Stanley Howard Knowles: May I confirm your memory, Mr. Speaker, by telling you that on March 27, 1950, a similar amendment was moved by the same member, the hon. member for Assiniboia (Mr. Argue), and it is to be found at page 1157 of Hansard for that year. You will find that on the next day, March 28, 1950, after considerable debate the amendment was voted on. It is similar to other amendments of a similar character, the details of which I have, but I will not take the time of the house to give them. That one is the best precedent because the amendment was in words very similar to the amendment which is now before you.


James Garfield Gardiner: May I ask whether that was not an amendment to the Agricultural Prices Support Act?


Stanley Howard Knowles: Correct, Mr. Speaker.


James Garfield Gardiner: That is the other bill, of course.


Stanley Howard Knowles: The amendment was not to the bill itself but to the motion for second reading of a bill amending the Agricultural Prices Support Act.


James Garfield Gardiner: That would be quite in
order-


Stanley Howard Knowles: Just a minute. In both cases the amendments suggest that the bill before the house be not now read a second time but in the words of citation 657 which you, Mr. Speaker, read a moment ago, "a resolution

Agricultural Products Board declaratory of some principle adverse to, or differing from, the principles, policy, or provisions of the bill" is placed before the house. I submit that neither on the other occasion nor tonight has the member asked for an amendment of the particular bill. After all, if he were to do that Your Honour would rule it out of order. You would say: Wait until you get into committee and then move the amendment. What is being asked for is other legislation differing from the legislation presented to the house at the present time. Perhaps Your Honour would like to leave the matter over until another time. I can present you with half a dozen such examples in the last three or four years.


James Garfield Gardiner: It is almost ten o'clock. I am only going to say one word in conclusion, and then I imagine we can call it ten o'clock and discuss the matter on Monday.


Percy Ellis Wright: I have the floor.


James Garfield Gardiner: It is on a point of order.


Mr. Speaker:: The minister is speaking on the point of order.


James Garfield Gardiner: We are discussing the point of order, and have been for some considerable time.


Mr. Speaker:: If it is on the point of order the minister has the right to speak.


James MacKerras Macdonnell: He always has the right to speak whether or not it is a point of order.


James Garfield Gardiner: I think the words which have just been read bear out exactly the argument I was presenting to the house a few moments ago, namely that it would be quite proper to move that kind of amendment on the bill to which it is related, the Agricultural Prices Support Act. If an amendment were going to be made of the nature indicated, that is the act to which it would be made. I can quite understand the ruling being given, when that measure was before the house for amendments that it was proper to move some other amendment to the bill or the act. But here we have a new bill that is not related to that act in any way whatsoever. The purpose of this bill is to set up a board. That has nothing to do with the matter of establishing any formula in connection with prices. The purpose of the amendment moved is to amend some other bill, some other act.


Percy Ellis Wright: No.


James Garfield Gardiner: It does not mean anything unless it means that. I do not think it is proper to introduce a full-scale discussion on another bill into the discussion of this

particular bill. I submit that, and if you will call it ten o'clock we can continue on Monday.


Percy Ellis Wright: I wish to say a word on the point of order. The minister has just made the statement-


Some hon. Members:: Ten o'clock.


Mr. Speaker:: Order. I think the hon. member for Melfort (Mr. Wright) has the right to say a word on the point of order.


Percy Ellis Wright: The minister has stated that this bill has no connection with the Agricultural Prices Support Act. What about subsection 5 of section 4? It reads:
The board may, when so appointed under paragraph (i) of subsection 1 of section 9 of the Agricultural Prices Support Act, 1944, undertake the purchase and the disposition of agricultural products for the purposes of that act.
This bill has a very definite connection with the Agricultural Prices Support Act if it means anything at all.


James Garfield Gardiner: It has nothing to do with the sections that deal with the question that is referred to here.


Percy Ellis Wright: I move the adjournment of the debate.
On motion of Mr. Wright the debate was adjourned.



BUSINESS OF THE HOUSE

Alphonse Fournier: Mr. Speaker, on Monday we will take up Bill No. 18, an act to provide for the establishment of an agricultural products board. That is the bill that has been under discussion tonight. Then we will take up Bill No. 36, an act to amend the Combines Investigation Act; Bill No. 15, an act to provide for privileges and immunities in respect of the North Atlantic Treaty Organization.


George Alexander Drew: You can stop there.


Alphonse Fournier: Bill No. 23, an act to amend the Government Annuities Act; Bill No. 26, an act to amend the Public Works Act. This is a bill for patient people. I have been thinking over what was said by the opposition and perhaps we may amend it to meet their wishes in part anyway.


An hon. Member:: You had better.


Alphonse Fournier: I do not want to lose my good reputation. If time permits we will take up the remaining items on the order paper.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to the order of the house passed on November 2, 1951.
[Stage Direction]
Monday, December 17, 1951